AUD/USD    – 0.7574
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AUD/USD – Wave 5 of C and (B) has possibly ended at 1.1081



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Although aussie met resistance at 0.7680 last week and has slipped again, retaining our view that further consolidation would take place and marginal weakness from here cannot be ruled out, however, reckon 0.7540-45 would limit downside and bring rebound later, above resistance at 0.7680 would suggest low is possibly formed but break of indicated resistance at 0.7750 is needed to extend recent rise from 0.7158 to previous chart resistance at 0.7778. Having said that, a break there is needed to retain bullishness and signal another leg of major corrective upmove from 0.6827 low is underway for headway to 0.7835 resistance first, then 0.7900, however, psychological resistance at 0.8000 should hold from here.

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, expect pullback to be limited to 0.7540-45 and bring another rise later. Only a drop below indicated support at 0.7491 would abort and signal the aforesaid rise from 0.7158 has ended, bring further fall to 0.7450, then towards 0.7400. 


Recommendation: Hold long entered at 0.7600 for 0.7800 with stop below 0.7550


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.
