AUDUSD Carves Potential Top Around 0.7275

20 August 2020

AUDUSD might have finally carved a meaningful top around 0.7275 mark yesterday. The currency had reversed sharply and is seen to be trading around 0.7175 levels for now. A break below immediate trend line support and 0.7100 would encouraging to bears.

AUDUSD probable wave counts are as follows: The currency had dropped to fresh lows at 0.5505 levels in March 2020. Since then, it has remained in control of bulls carving a series of higher highs and higher lows through 0.7275 levels respectively.

The rally between 0.5505 and 0.7275 could be seen as an impulse wave and has also managed to take out past resistance above 0.7250 mark. Ideally, an impulse wave is followed by a corrective wave in the opposite direction.

AUDUSD might be preparing to produce a meaningful corrective drop, 3 waves from here. Immediate support is seen through 0.7100 levels, while resistance is seen around 0.7275 respectively. A break below 0.7100 would confirm that a top is in place around 0.7275 mark.

The first wave within the proposed corrective phase might drop towards 0.6450/0.6500 handle, which is also fibonacci 0.382 retracement of the entire rally. Please note that the entire corrective phase could terminate around 0.6230 mark, going forward.

Traders might be inclined to remain short from here, with a protective stop just above 0.7275 levels and projected targets towards 0.6500 and 0.6230 levels respectively.

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