AUD/USD – 0.7574
AUD/USD – Wave 5 of C and (B) has possibly ended at 1.1081
Aussie has dropped sharply last week and finally broke below support at 0.7491, suggesting recent entire rise from 0.7158 has indeed ended at 0.775 last month, hence further choppy trading within early established range would be seen and downside risk remains for the decline from 0.7750 to bring at least a strong correction of the aforesaid rise, initial downside target is seen at 0.7450-55 (50% Fibonacci retracement of 0.7158-0.7750), then towards 0.7380-85 (61.8% Fibonacci retracement), however, near term oversold condition should prevent sharp fall below 0.7300-10 and reckon 0.7280-85 would hold from here, bring rebound 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 initial recovery to 0.7535-40 is likely, reckon 0.7370-80 would limit upside and bring another decline later to aforesaid downside retracement targets. A daily close above previous support at 0.7587 would defer and risk a stronger rebound to 0.7640-45 but only break of resistance at 0.7680 would abort and suggest the fall from 0.7750 has ended instead,
Recommendation: Sell at 0.7570 for 0.7390 with stop below 0.7670
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.