Trade Idea: AUD/USD - Buy At 0.8750

AUD/USD – 0.8801

Recent wave: Wave v of wave (v) may extend towards 0.8860

Trend: Up

Original strategy

Buy at 0.8650, Target: 0.8800, Stop: 0.8580

Our trading strategy

Buy at 0.8750, Target: 0.8900, Stop: 0.8690

Despite retreating to 0.8676, as aussie has rallied again after finding renewed buying interest there, suggesting recent upmove has resumed in wave (5) and further gain to 0.8860 (50% projection of 0.8241-0.8790 measuring from0.8585) and possibly to 0.8900 but as this is the final leg of recent rally, reckon 0.8924 (61.8% projection) would hold.

In view of this, we are still looking to buy aussie again on pullback for such a rise. Only below said support would signal a temporary top is possibly formed and correction towards 0.8585 would follow but break there is needed to confirm a temporary top has been formed and retracement to 0.8500 would follow.

Our preferred count is that wave (v) from 0.7700 is sub-divided by wave i: 0.7918, ii: 0.7859, wave iii at 0.8479 (instead of 0.8339) and wave iv correction ended at 0.8241 and wave v either ended at 0.8776 or may extend towards 0.8860 and 0.8900.

On the bigger picture, the break of 0.8265 and the subsequent rally confirms our bullish count that wave C rally from 0.6248 (2 Feb 2009) has resumed and the wave (v) of this wave C has either ended at 0.8479 or may extend marginally, however, as this move is the last leg of the larger degree wave 3 of C, upside should be limited to 0.8923 (61.8% projection of wave (i) to (iii) measuring from (iv) of wave 3 from 0.8286) and 0.9000 should remain intact.

To re-cap the current bullish count on aussie, the rally from 0.6007 to 0.7270 (7 Jan 2009) is tentatively marked as wave A, the retreat to 0.6248 (2 Feb 2009) is seen as wave B and the subsequent upmove is labeled as wave C should extend be capped below 0.9000