Since starting the bullish movements on November 20, 2008 which topped out in November 2009, it seems that the pair has completed an [IM] wave, as seen on the daily chart, including the suggested internal count.
The secondary image shows a reversal classical pattern, signaling that a new bearish wave has started already with southern targets to be reached which we are to discuss in details
AUDUSD - Annual Technical Analysis for 2010
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The first wave was an IM wave or might also be seen as a ZZ, and in our case here, we prefer the ZZ formation which confirms the extended targets.
In both cases, we see that a bearish correction has started already, while the weekly chart below is pointing at technical target around 23.6% Fibonacci level at 0.8625 zones and might extend further towards 38.2% Fibonacci level at 0.8130 areas.
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The suggested probabilities for this correction are various and the targets for the B wave are around 0.8625 followed by 0.8130.
According to Elliott rules, B wave might take the pair towards 0.7745 and 0.7365, but we should take into consideration that the pair corrected 23.6% and sometimes 38.2% during last year?s incline.
Thus, the pair is presently correcting into 2010, before resuming its projected bullishness.
Let's move back to the first image, where the technical target of the classical pattern resides around 23.6% Fibonacci level, while Stochastic shows a definite oversold sign on the weekly interval. Consequently, if the pair couldn't hit 23.6% Fibonacci level, then the pair will be targeting 1.0150 zones.
A break of 23.6% Fibonacci will take us towards 38.2% Fibonacci level and in this case the bullish movements will be very weak.
Let's see what if it succeeded in breaching 38.2% Fibonacci level clearly?
Some analysts see that there is a potential bearish scenario, particularly if the pair succeeded in breaching 38.2% Fibonacci level; the classical scenario which we explained has been activated already after the pair breached the neckline around 0.8930 after it retested the broken uptrend line.
The successful breakout, accompanied by a steady move below the support level paved the way for the short term bearish wave. It might turn the medium term trend also to the downside via staring a new descending wave, targeting 0.8445 in the initial wave followed by a slight upside correction reaching 0.8675, followed by resuming the major descending wave targeting 0.7480 then 0.7025. Those levels represent 61.8% and 76.4% Fibonacci of 2009 bullish wave.
From here, the bearish pattern will be the source that?s pressuring the pair to be controlled by negativity during 2010. In the end, the price pair?s movement around 38.2% will be the judge for 2010 trend.
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