The Australian dollar recovered initially in 2016 and then spent most of last year moving sideways, suggesting further consolidation above last year’s low at 0.6827 would take place and recovery to 0.7520-25 cannot be ruled out, however, reckon resistance at 0.7778 should cap upside and bring another decline. Below 0.7000 would bring retest of 0.6827 but break of this last year’s low is needed to signal the major fall from 1.1083 (wave (C) as well as larger degree wave B top) has resumed and extend weakness to 0.6500-10 (1.236 times projection of 1.1083-0.8660 measuring from 0.9505), then towards 0.6240-50, however, oversold condition should limit downside to 0.6000-08 (psychological support and 2008 low) and price should stay well above 0.5580-90 (1.618 times extension), risk from there is seen for a corrective rebound to take place later.
On the upside, expect recovery to be limited to 0.7520-25 and bring such a decline to aforesaid downside targets. A sustained breach above said resistance at 0.7778 would defer bearishness and bring another corrective rebound to 0.7900, then psychological resistance at 0.8000 but reckon resistance at 0.8163 would limit upside and 0.8350-60, price should falter well below previous support at 0.8660 (minor wave i trough), bring another decline in latter part of 2017.
