AUDUSD had rallied through fresh highs around 0.7182 levels yesterday before pulling back. The currency pair has managed to take out yet another resistance around 0.7100. Bears must be poised to be back in control soon.
AUDUSD probable larger degree wave counts are as follows: The currency has been in a religious uptrend since 0.5505 lows in March 2020. Bulls have remained in control through the past weeks and carved a series of higher highs and higher lows.
AUDUSD seems to have carved an impulse wave between 0.5505 and 0.7182 levels. The complete rally is not seen on the view presented here but Wave 4 potential termination around 0.6400 has been marked on the chart.
Ideally, an impulse rally is followed by a corrective drop, which is either a flat, zigzag or triangle. If a potential top is in place around 0.7182 and the above wave counts hold well, AUDUSD should reverse lower towards 0.6400 levels at least.
Also note that 0.6400 is the fibonacci 0.382 retracement of the entire rally between 0.5505 through 0.7182 respectively. High probability remains for a bullish bounce if prices manage to reach there. A break below 0.7000 will confirm a potential reversal.
Most traders might be preparing to initiate fresh short positions around current price or after a break below trend line support. Risk can be placed above the recent swing highs at 0.7182 levels and proposed target could be 0.6400 in the short term.
Technical Analysis Team
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