Trade Idea: AUD/USD - Hold Long Entered At 0.8030

AUD/USD – 0.8037

Recent wave: wave 3 rally from 0.6248 (2 Feb 2009) made temporary top at 0.8265 (3 June)

Trend: Up

Previous strategy: Bought at 0.8030, Target: 0.8150, Stop-loss: 0.7980

Our trading strategy: Hold long entered at 0.8030, Target: 0.8150, Stop-loss: 0.7980

Although the Australian dollar dropped again after rebounding to 0.8109 yesterday and fell to as low as 0.8009 this morning, as long as indicated support at 0.7984 remains intact, we are still treating the fall from 0.8156 as correction but our preferred count has been revised as follow: the wave (1) from 0.7777 ended at 0.8156 (instead of 0.8088) and an a-b-c correction has possibly ended at 0.8009 with a: 0.8024, b: 0.8109, c: 0.8009, However, above 0.8109 resistance is necessary to provide confirmation that correction has ended, then gain towards 0.8156 resistance would follow, above this level would signal upmove has resumed in wave (3) for retest temporary top at 0.8265.

In view of this bullish count, we are still holding on to our long position entered at 0.8030 with stop below previous support at 0.7984, break there would dampen this very bullish count and suggest the correction in wave (2) is still in progress for further fall to 0.7928/33, support at 0.7777 would continue to hold.

Looking ahead, we are still retaining the view that an upside break will take place later to confirm the wave C rally from 0.6248 (2 Feb 2009) has resumed to 0.8292 (1.618 times Fibonacci projection of 0.6007-0.7270 measured from 0.6248) and possibly towards 0.8383 (50% Fibonacci retracement of 0.9851-0.6007) to end the larger degree wave (B).

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 and formed a temporary top today at 0.8265 (minor wave iii), above would extend to 0.8292 and possibly towards 0.8383.