Trade Idea: AUD/USD - Sell At 0.9190

AUD/USD – 0.9115

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

Trend: Near term up

Original strategy

Buy at 0.9100, Target: 0.9290, Stop: 0.9030

New strategy

Sell at 0.9190, Target: 0.9030, Stop: 0.9260

Despite last week's rise to 0.9253, the subsequent euro-led retreat suggests a temporary top has been formed (tentatively minor wave 1 of iii) and correction would take place (in minor wave 2 of iii) and retracement to 0.9080 and then towards 0.9027 (38.2% and 50% Fibonacci retracement of wave 1 rise from 0.8800 to 0.9253), however, reckon 0.8973 (61.8% Fibonacci retracement) would hold and bring another rally later in wave 3 of iii early next month.

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, wave iii has ended at 0.8781, wave iv ended at 0.8916 with wave v at 0.8578. The rally to 0.9253 is the wave 1 of iii and the retreat from there signals wave 2 of iii is unfolding and weakness to 0.9027 would be seen but 0.8973 should hold and bring another upmove in wave 3 towards 0.9331 later.

In view of this, we are turning short on recovery for this wave 2 correction. Only above 0.9253 would extend upmove to resistance at 0.9331.

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.