AUD/USD – 0.9356
AUD/USD – Wave 5 of C and (B) has possibly ended at 1.1081
Current firmness after this month's anticipated rebound has justified our view that low has been formed at 0.8848 earlier last month and near term bullish count remains for correction of recent decline to 0.9440-50, then towards 0.9500-10 (38.2% Fibonacci retracement of 1.0582-0.8848), however, near term overbought condition should limit upside to 0.9550-60 and price should falter well below resistance at 0.9666, bring another decline probably in Q4.
We are keeping our count that top has been formed at 1.1081 (wave 5 of V) and major correction (A-B-C-X-A-B-C) has commenced, indicated downside targets at 0.9218 (61.8% Fibonacci retracement of 0.8066-1.1081) and 0.9144 (38.2% Fibonacci retracement of entire rise from 0.6007-1.1081) had been met and further weakness to 0.8770, then towards 0.8500 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 ended at 0.9388, followed by B leg at 1.0857 and C leg at 0.9581, D leg ended at 1.0625 and E leg is still in progress but should stay above 0.9581, bring eventual rally later. Current breach of indicated support at 0.9581 suggests the major A-B-C-X-A-B-C correction is unfolding and downside risk remains for weakness towards psychological support at 0.8500.
On the downside, whilst pullback to 0.9215-20 cannot be ruled out, reckon downside would be limited to 0.9115 minor support and bring another rise later to aforesaid upside targets. Below 0.9030-40 would suggest top is possibly formed and risk weakness to 0.8970-75 but support at 0.8891 should remain intact, bring another rebound. Only a drop below said support at 0.8891 would abort and signal rebound from 0.8848 has ended, risk retest of this level but break of this support is needed to signal recent decline has once again resumed and extend weakness to 0.8790-00 but downside should be limited to 0.8750, price should stay above 0.8690-00, bring another strong rebound later.
Recommendation: Buy again at 0.9120 for 0.9420 with stop below 0.9020
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.