Bottom line: AUDUSD remains bullish against 0.5900 levels, going forward. The rally is expected to be sharp as initial resistance is seen through 0.6700 levels.
AUDUSD prints an intermediary bottom around 0.5500 levels, about 300 pips below the projected support at 0.5800/50 levels last week. We again bring a bigger picture through weekly chart setups and potential counts. The wave counts might be suggesting that AUDUSD bears have managed to carve an A-B-C drop between 1.1000 and 0.5500 levels between July 2011 and March 2020. This corrective drop may be a part of a larger corrective structure (W)-(X)-(Y). If the above counts are correct at a larger degree, AUDUSD could be unfolding a potential 5-3-5 structure on the higher side, to complete Wave (Y) within the larger form. Hence, the bottom formed on March 16, 2020 could hold for a longer time, allowing a zigzag corrective rally to be complete at a higher degree. Please note that the corrective rally may travel a distance up to 61.8 percent of Wave (X) between 1.1000 and 0.5500 respectively. The first potential target may be seen towards 0.7500/7600 levels, which is fibonacci 0.382 retracement of previous drop. If the above larger wave counts hold true, most traders might be willing to initiate fresh long positions, with protective stops just below 0.5500 and projected targets around 0.7600 levels respectively. Looking at the lower degree, we still need to see an impulse rally to materialize from 0.5500 lows to confirm a potential trend reversal. More conservative trading strategy might be to remain flat for now and allow 5 waves structure on the hourly chart. Please note that a break above initial resistance at 0.6700 would be constructive for bulls. Once the above price action is confirmed, it might be good to buy AUDUSD on dips.
Harsh Japee, Technical Analyst.
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