AUDUSD Potential Top In Place At 0.7275
27 August 2020
AUDUSD might have finally carved a potential top around 0.7275 mark over the last week. The currency had reversed sharply thereafter and print lows at 0.7135 levels before pulling back higher again. Bears are now looking poised to resume lower.
AUDUSD probable wave counts are as follows: The entire rally from 0.5510 through 0.7275 seems to be an impulse. Ideally, an impulse rally should be followed by a corrective drop at a similar degree. If the above proposed count holds well, we should witness a bearish turn soon.
AUDUSD should correct lower in 3 waves A-B-C towards 0.6600 and 0.6200 levels respectively. Please note that fibonacci 0.618 of the above rally is passing just below the 0.7200 mark. High probability remains for a bullish bounce if prices manage to reach there.
Looking at the recent lower degree wave counts, the drop from 0.7275 through 0.7235 seems to be an impulse. It could be seen as a lower degree wave I, which is being retraced by a similar degree wave ii around 0.7220/30 levels.
Also note that fibonacci 0.618 of the drop between 0.7275 and 0.7135 is also seen through 0.7220/25 levels. A bearish bounce here should push AUDUSD lower towards 0.6600 levels at least. The drop through 0.6600 could be seen as Wave A, within the proposed A-B-C correction.
Traders might remain inclined to initiate fresh short positions around 0.7200/0.7220, with protective stops above 0.7300 while projected targets point towards 0.6600 and 0.6200 respectively.
Prepared by
Technical Analysis Team
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