Trade Idea: AUD/USD - Buy At 0.9190

AUD/USD – 0.9228

Recent wave: Wave v of wave (v) possibly ended at 0.9407

Trend: Sideways

Original strategy

Buy at 0.9190, Target: E.9350, Stop: 0.9120

New strategy

Buy at 0.9190, Target: E.9350, Stop: 0.9120

Although aussie retreated after rebounding to 0.9279 yesterday and marginal weakness from here is likely, support at 0.9170/74 should hold and bring another rebound and break of resistance at 0.9330 would extend recent rise from 0.8735 towards last year's high of 0.9407 later.

In view of this, we are still looking to buy aussie on dips for such a rise. Below support at 0.9122 would risk stronger correction to 0.9060/70 but reckon 0.9000 would hold, bring such a rally later.

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 in view of the strong rise in the first trading week of 2010, we are keeping our view that the wave v is still in progress and retest of 0.9407 is under way.

This move from 0.8735 itself is an impulsive move as labeled in the attached chart with wave iii possibly ended at 0.9326 and wave iv is now unfolding which should find renewed buying interest at 0.9122. Above 0.9407 would extend gain to 0.9500 and later towards 0.9600.

On the bigger picture, aussie's rally after breaking resistance at 0.8265 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 0.9407 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 0.9600.

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 0.9600.