Trade Idea: AUD/USD – Buy At 0.8060

Recent wave: Wave c ended at 0.7700

Trend: Up

Original strategy : Buy at 0.7920, Target: 0.8035. Stop: 0.7855

Our trading strategy : Buy at 0.8060, Target: 0.8200, Stop: 0.8000

Although the Australian dollar slipped to as low as 0.7971 last Friday, the currency pair rallied from there on active cross-buying versus Japanese yen and confirming the wave ii from 0.8057 ended at 0.7971 with a short c (a: 0.7960, b: 0.8073) and wave iii is now in progress for retest of 0.8156, then towards 0.8200, then retest of 0.8265.

To recap our latest preferred count, the prolonged wave iv from 0.8265 has ended at 0.7700 as a double three and the fall to 0.7777 is treated as the first set of a-b-c, followed by wave x at 0.8156 and second set of a-b-c ended at 0.7700 with a: 0.7879, b: 0.8039 and c: 0.7700.

In view of the above bullish count, we are still looking to buy aussie on pullback but with a higher entry level. A daily close above resistance at 0.8156 would confirm the wave v is under way for retest of 0.8265, then towards 0.8412 (1.236 time projection of wave i measuring from wave ii).

On the downside, pullback should be limited to 0.8057 (previous resistance) and bring such upmove. Below 0.8000 would risk 0.7971 but only break there would risk correction to 0.7900/10 before another rise.

On the bigger picture, our bullish view remains for an eventual upside break to 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.