AUD/USD     –  0.7903


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

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Aussie has rallied after finding decent demand at 0.7571 earlier this month and upmove has accelerated after breaking resistance at 0.7750 as well as last year’s high at 0.7835, adding credence to our bullish count for the medium term erratic rise from 0.6827 (2016 low) to bring retracement of early downtrend, hence gain to 0.8000 psychological level would be seen, break there would encourage for subsequent rise to 0.8100 but previous resistance at 0.8163 would hold from here due to near term overbought condition.

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 initial pullback to 0.7830 (38.2% Fibonacci retracement of 0.7571-0.7990) cannot be ruled out, reckon 0.7780-86 (50% Fibonacci retracement and previous support) would hold and bring another rise later to aforesaid upside targets. A daily close below there would defer and risk correction to 0.7730-35 (61.8% Fibonacci retracement) but only break of another previous resistance at 0.7712 (wave i top) would confirm top has been formed. 

Recommendation: Buy at 0.7800 for 0.8000 with stop below 0.7700.

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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