AUD/USD – 0.7402
AUD/USD – Wave 5 of C and (B) has possibly ended at 1.1081
Aussie has recovered after falling to 0.7329 earlier this week, suggesting minor consolidation above this level would be seen and corrective bounce to 0.7450 cannot be ruled out, however, reckon upside would be limited to 0.7490-00 and bring another decline later, below said support would add credence to our bearish view that fall from 0.7750 is still in progress, hence further decline to 0.7300 is likely, however, oversold condition should prevent sharp fall below 0.7270-80 and reckon 0.7200-10 would hold from here, price should stay well above previous chart support at 0.7158, bring rebound later.
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 upside, whilst initial recovery to 0.7450 cannot be ruled out, previous support at 0.7473 should turn into resistance and bring another decline later to aforesaid downside targets. Above 0.7500 would risk test of last week’s high at 0.7556 but only a daily close above there would signal a temporary low is formed, bring a stronger rebound to another previous resistance at 0.7592, break there would add credence to this view, bring correction of recent decline to strong resistance at 0.7611 first.
Recommendation: Sell again at 0.7490 for 0.7290 with stop above 0.7590
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.