AUD/USD     –  0.7555




 

AUD/USD – Wave 5 of C and (B) has possibly ended at 1.1081

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As aussie has eased after surging to 0.7636 last week, suggesting minor consolidation below this level would be seen and pullback to 0.7510-15 cannot be ruled out, however, reckon 0.7455-60 would contain downside and bring another rise later, above said resistance at 0.7636 would signal the rise from 0.7329 is still in progress, this would also reinforce our view that the fall from 0.7750 has ended at 0.7329, then further gain to previous resistance at 0.7680 would be seen but said resistance at 0.7750 would hold on first testing.


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 0.7945 (61.8% Fibonacci retracement of entire rise from 0.6007-1.1081) and 0.7750 had been met and downside bias is seen for further weakness to 0.6800, then 0.6700 but reckon 0.6500 would hold from here.


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, this level is now treated as the peak of wave (C) as well as larger degree wave B, hence major fall in wave C has commenced, our initial downside target at psychological support at 0.7000 has just been met and further weakness to 0.6500 would be seen later.



On the downside, whilst pullback to 0.7500-10 cannot be ruled out, reckon downside would be limited to 0.7455-60 and bring another rise later. Only below support at 0.7415 would abort and suggest top is possibly formed, bring weakness towards said strong support at 0.7372 which is likely to hold from here. Looking ahead, a break below this support is needed to signal the rebound from 0.7329 has ended and revive bearishness for retest of this level later.   



Recommendation: Turn long at 0.7470 for 0.7670 with stop below 0.7370.


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.

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