Trade Idea: AUD/USD - Stand Aside

AUD/USD – 0.8636

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

Trend: Sideways

New strategy

Stand aside

Yesterday's breach of support at 0.8735 calls for a review of our preferred count and revives our previous bearish count that, wave 5 of C of larger degree wave (B) has ended at 0.9407 which followed by a major A-B-C correction with A leg ended at 0.8735, the rebound to 0.9331 is wave B and the C leg is now in progress and already reached equality projection of A leg at 0.8659 (0.9407-0.8735 measuring from 0.9331) and further weakness towards 0.8500 (1.236 times projection) would be seen, however, reckon 0.8400 would limit downside due to oversold condition.

Our preferred count is that the major rise from 0.6007 a wave (B) and the wave C of this 3-legged (B) commenced from 0.6248 which ended at 0.9407. then the fall from 0.9407 to 0.8735 is wave A and the rise from 0.8735 to 0.9331 is re-labeled as a-b-c wave B (as marked in the attached chart). Therefore, the decline from 0.9331 is the wave C with minor wave i ended at 0.9175 and wave ii at 0.9280, hence wave iii is still in progress and may extend to aforesaid downside target..

In view of near term oversold condition, would not chase this here and we prefer to wait for subsequent recovery to enter short as upside should be limited to 8775/80 (previous support turned resistance).

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 5 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 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.