Friday, June 24, 2016

Audusd: The Bears are not done yet.

The chart above is the weekly chart of Audusd and it showed that price seemed returned from 0.784 (wave 4) and it looked like the bearish trend is not exhausted yet.

The downward move that started since mid-2011could continue to 0.6235. We also noted that a long term wide 3-wave correction preceded this impulse wave.

The 4th wave was a clear expended flat corrective pattern and the bearish trend is expected to continue in a new motive wave (wave 5) which will likely break below 0.6840 (the most recent weekly support).

The move that followed the end of wave 4 (expanded flat) and the beginning of wave 5 is shown below.

Let's analyze it.

Wave 5 started in late April 2016 as shown by the chart above. Wave 5 completed an impulse sub-wave 1 above 0.71 before it rallied just as expected to a very crucial Fibonacci level 0.7644.

There was clearly an opportunity for more bearish move.

The following hours, the results of the british BREXIT referendum was being counted and announced and we saw price going deep.The fundamentals seemed to have confirmed this move and we expect Aussie to dip further.

Presently( at the time of posting), price is rallying to 0.7490-0.755 (50-61.8% fibo retracement of the spike) and forming some kind of intra day rejection candle engulfing cloud there which is shown by the chart below.

We expect the bearish move to continue downside and probably break below 0.714 and get to 0.6235.

A rally above 0.7525 and further rally above 0.7645 will pose a threat to this expected bearish expectation.

The bearish opportunity will be overturned if price breaks above 0.7835 as this may show that the bulls have taken over.