AUD/USD – 1.0272
AUD/USD – Wave 5 of C and (B) has possibly ended at 1.1081
Although aussie resumed recent decline from 1.0599 in line with our expectations and price dropped below previous support at 1.0149, lack of follow through selling and current sharp rebound from 1.0116 suggest a temporary low is possibly formed there and consolidation with upside bias is seen for gain to 1.0340-45 but break of resistance at 1.0375-80 is needed to add credence to this view and bring at least a strong retracement of the fall from 1.0599 to 1.0414 (61.8% Fibonacci retracement of 1.0599-1.0116), then towards 1.0477 resistance. Having said that, as broad outlook is still consolidative, upside should be limited to 1.0540-50 and price should falter well below said resistance at 1.0599 and bring further choppy trading. We are keeping our view that the major correction has commenced from 1.1081 with first A leg (a-b-c) ended at 0.9388, B leg has ended at 1.0857 and wave C has commenced with first leg ended at 0.9581 and eventual fall towards said support at 0.9388 would be seen.
Our preferred count is that the rally from 0.6007 to 0.7270 (7 Jan 2009) is marked as wave A, the retreat to 0.6248 (2 Feb 2009) is wave B and the subsequent upmove is labeled as wave C with wave (iii) and wave (iv) ended at 0.8265 and 0.7700 respectively and wave (v) as well as 3 ended at 0.9407, then wave 4 ended at 0.8066 (instead of 0.8578). The wave 5 has met our indicated projection target of 1.1060 and could ended at 1.1081 and major A-B-C correction has commenced with A leg possibly ended at 0.9388, so wave B is now unfolding for retracement of wave A and has already reached our indicated upside target at 1.0600, the retreat from 1.0857 suggests top is possibly formed but a breach of 1.0200 is needed to confirm.
On the downside, whilst pullback to 1.0200-10 cannot be ruled out, downside should be limited to 1.0145-50 and bring such a rebound to aforesaid upside targets. Only below said support at 1.0116 would extend the decline from 1.0625 top to 1.0103 (50% Fibonacci retracement of 0.9581-1.0625) and possibly towards 1.0050-55, however, still reckon psychological support at 1.0000 would limit downside and previous support at 0.9969 would hold from here, bring rebound later.
Recommendation: Buy at 1.0200 for 1.0400 with stop below 1.0100
Our alternate count on the daily chart treated the top formed in 2008 at 0.9851 could be a larger degree wave I and was followed by a deep and sharp correction in wave II to 0.6007 and wave III is unfolding from there.
The long-term uptrend started from 0.4775 (2 Apr 2001) with an impulsive structure. Wave I is labeled as 0.4775 to 0.9851 (15 Jul 2008), wave II has ended at 0.6007 (Oct 2008) and wave III is still in progress which may extend further gain to 1.1265.