AUDUSD found support last week and rallied back above the 0.9400 area where we see a 61.8% Fibonacci retracement level. This is the most important level for a corrective wave B or wave 2.
We can see that market has turned nicely down from that region in the last two trading days, following Friday’s NFP miss. The fall is strong and impulsive so we believe that a contra-trend move is complete and that the market is heading south. We expect a drop into wave C or wave 3, which is not important at these stages as minimum downside levels suggest a drop to the 0.9070-0.9120 area as long as the 0.9400 is invalidation level will hold.
However, before a downtrend may continue and even accelerate we may see some pullback on the intraday basis. We are looking at 0.9300 followed by 0.9340 as potential limited upside for the current intraday correction that we already see it unfolding.
Trade plan:
Short AUDUSD with 50% at 0.9295 and add 50% at 0.9335 with stops at 0.9400 and target at 0.9100.
Pull stops to break even if orders filled and if 0.9230 is broken.
Cancel unfilled orders when 0.9230 is taken out.
