AUD/USD – 0.7565
AUD/USD – Wave 5 of C and (B) has possibly ended at 1.1081
As aussie has retreated quite sharply after rising to 0.7741 late last month, suggesting top is possibly formed there and consolidation below this level would be seen with mild downside bias for test of support at 0.7512, however, a daily close below there is needed to add credence to this view, bring retracement of recent upmove to 0.7490 (38.2% Fibonacci retracement of 0.7158-0.7696) and then 0.7455-60 but reckon downside would be limited to 0.7425-30 (50% Fibonacci retracement) and price should stay above 0.7360-65 (61.8% Fibonacci retracement), bring another rise later.
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 upside, whilst recovery to 0.7600-05 cannot be ruled out, reckon upside would be limited to 0.7635-40 and bring another decline. Above 0.7700 would risk retest of said resistance at 0.7741 but break there is needed to extend recent rise from 0.7158 to resistance at 0.7778. Looking ahead, only a break of this level would suggest another leg of major corrective upmove from 0.6827 low is underway for retest of 0.7835 resistance first, then 0.7900, however, psychological resistance at 0.8000 should hold from here.
Recommendation: Sell at 0.7605 for 0.7450 with stop above 0.7705
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.