The XAO is about to reach an important juncture that will validate one of the two scenarios shown.
The first Scenario shows the leg down that started in 2007 completed. The evidence supporting this scenario is the latest market action that is unfolding in 5 waves up.
This alone doesn't necessarily indicate that a temporary bottom is in place. The ending wave count looks a little unusual as well - wave (4) would need to be a triangle that looks a little strange as far as triangles go. However, we must still look at the possibility that wave 'A' circle down is complete. One will need to look at the next pullback with caution as it could lead into the 2nd scenario instead.
The second scenario sees wave (4) still underway as an expanded flat (or even a triangle - both alternating well with wave (2) ). The current wave structure suits this scenario a little better than the first. Two 3 wave moves are complete - 'A' and 'B'. Wave 'C' needs to be a 5 wave move upwards (which is exactly what's unfolding - so far). In addition, when comparing wave (1) down with wave (5) down - the waves are in complete contrast in the first scenario - wave (5) is simply too small. The second scenario would see wave (5) down yet to commence.
Right now, I'm allowing for both scenarios and both support a short term trend upwards. The next reasonable pullback (down to around 3400), that should occur soon, will provide further evidence as to the unfolding wave counts.