AUD/USD Elliott Wave Analysis

AUD/USD     –  0.7888




AUD/USD – Wave 5 of C and (B) has possibly ended at 1.1081




Aussie has retreated again after faltering below resistance at 0.8066, retaining our view that further consolidation below this level would be seen and initial downside risk remains for pullback to 0.7815-20 (50% Fibonacci retracement of 0.7571-0.8066), however, reckon downside would be limited to 0.7800 and bring another rise later, above 0.7980 would signal the retreat form 0.8066 has ended, bring test of 0.8000, then towards said resistance, once this level is penetrated, this would extend medium term erratic rise from 0.6827 (2016 low) for retracement of early downtrend to 0.8100, then towards previous resistance at 0.8163.


We are keeping our count that top has been formed at 1.1081 (wave 5 of V) and major correction (A-B-C-X-A-B-C) has commenced, indicated downside targets at 0.7945 (61.8% Fibonacci retracement of entire rise from 0.6007-1.1081) and 0.7750 had been met and downside bias is seen for further weakness to 0.6800, then 0.6700 but reckon 0.6500 would hold from here.



Our preferred count is that the rally from 0.6007 to 0.7270 (7 Jan 2009) is marked as wave A, the retreat to 0.6248 (2 Feb 2009) is wave B and the subsequent upmove is labeled as wave C with wave (iii) and wave (iv) ended at 0.8265 and 0.7700 respectively and wave (v) as well as 3 ended at 0.9407, then wave 4 ended at 0.8066 (instead of 0.8578). The wave 5 has met our indicated projection target of 1.1060 and could ended at 1.1081, this level is now treated as the peak of wave (C) as well as larger degree wave B, hence major fall in wave C has commenced, our initial downside target at psychological support at 0.7000 has just been met and further weakness to 0.6500 would be seen later.



On the downside, whilst initial pullback to 0.7815-20 cannot be ruled out, reckon 0.7800 would limit downside and bring another rise later. Below 0.7760 (61.8% Fibonacci retracement of 0.7571-0.8066) would defer and suggest a temporary top is possibly formed, bring test of previous resistance at 0.7712 but only break there would provide confirmation, bring retracement of recent rise to 0.7650 first. 



Recommendation: Buy at 0.7800 for 0.8000 with stop below 0.7700.



Our alternate count on the daily chart treated the top formed in 2008 at 0.9851 could be a larger degree wave I and was followed by a deep and sharp correction in wave II to 0.6007 and wave III is unfolding from there.

The long-term uptrend started from 0.4775 (2 Apr 2001) with an impulsive structure. Wave I is labeled as 0.4775 to 0.9851 (15 Jul 2008), wave II has ended at 0.6007 (Oct 2008) and wave III is still in progress which may extend further gain to 1.1265.