AUD/JPY Elliott Wave outlook: Potential wave three acceleration on break of zigzag channel
|The AUDJPY pair is offering a clean, high-probability Elliott Wave setup, with implications for a significant directional move as we move toward the end of June. The labelling on the 1H/4H chart suggests that the corrective wave structure has likely completed a larger degree wave 2 of (3), and price action now appears to be coiling within a smaller wave (ii) zigzag channel.
Elliott Wave structure breakdown
The sequence currently visible follows an impulsive narrative that a seasoned Elliottician will recognize immediately. Here's a structural outline:
- Wave 1 of (3) unfolded with sharp downside momentum post wave (2) completion.
- Wave 2 of (3) appears to have corrected via a double zigzag W-X-Y structure, neatly bounded within a rising corrective channel.
- Within the minor sequence, we’re currently in what looks to be the end stages of wave (ii)—a classic zigzag corrective channel forming just under the prior subwave y of 2.
The key element here is structural compression, indicative of a market preparing for an impulsive breakout. The rejection at the upper bound of wave (ii)’s corrective channel adds weight to the bearish interpretation.
Price action dynamics and confirmation triggers
From a pure price action standpoint, AUDJPY is respecting the upper boundary of both the wave (ii) channel and the prior corrective trendline that also capped wave y of 2. What’s missing now is a decisive breakdown of the lower bound of the wave (ii) channel, which would confirm that wave 3 of (3) is underway.
Bearish breakout triggers
- Clear 4H close below 94.00 (channel support).
- Momentum divergence confirming corrective exhaustion.
- Acceleration toward 93.00 as initial target with potential extension to 91.50 area.
If wave 3 of (3) is indeed starting, we can expect:
- A sharp expansion in volatility.
- A steeper angle of descent, consistent with third-wave dynamics.
Minimal retracement once momentum kicks in—characteristic of a strong third wave.
Invalidations and alternate scenarios
While the current count holds strong technical validity, every disciplined Elliottician must also acknowledge the potential for alternate counts. In this case, the main invalidation for the bearish view would be:
- Break above the high of wave (ii) around 94.80 – this would force a reclassification of the corrective structure, possibly into a more complex WXYXZ or flat scenario.
- A sustained drift within the channel could also signal a deeper correction is still unfolding.
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