AUD/USD – 0.7469
AUD/USD – Wave 5 of C and (B) has possibly ended at 1.1081
Although aussie edged higher after staging a rebound from 0.7329 and marginal gain from there cannot be ruled out, as this move is viewed as retracement of recent decline, reckon upside would be limited to 0.7556 resistance and bring another decline later, below support at 0.7388 would signal the rebound from 0.7329 has ended, bring retest of this level first. Looking ahead, only a break below 0.7329 would signal the decline from 0.7750 top is still in progress, hence further fall to 0.7300, then 0.7270 would follow, however, oversold condition should prevent sharp fall below 0.7200-10 and 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 marginal recovery from here cannot be ruled out, reckon resistance at 0.7566 would limit upside and bring another decline. A daily close above this level would dampen our bearishness and signal a temporary low is formed instead, 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: Hold short entered 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.
