AUD/USD is in a downtrend since the beginning of 2018 when price ended a big corrective wave IV. We have seen a three-wave development to the downside from the 0.814 high, which can now be followed by a temporary, complex correction, known as a triangle in wave 4. A triangle is a five-legged pattern, which unfolds prior to the final leg. In our case this is leg 5, so be aware of further weakness once last leg E of a triangle fully develops.
A Triangle is a common 5-wave pattern labeled A-B-C-D-E that moves counter-trend and is corrective in nature. Triangles move within two channel lines drawn from waves A to C, and from waves B to D. A Triangle is either contracting or expanding depending on whether the channel lines are converging or expanding. Triangles are overlapping five wave affairs that subdivide 3-3-3-3-3.
Triangles can occur in wave 4, wave B, wave X position or in some very rare cases also in wave Y of a combination.
An EW triangle pattern:
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