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AUDUSD has turned down from 0.7834 high in May after wave C-circled completed a big corrective wave IV flat pattern. A flat has a 3-3-5 sub-wave structure, so it was a contra-trend movement that should send the price back to the lows. So far, the market made a very good and strong bearish turn to 0.7130 with a clearly impulsive personality, thus we believe that a big black wave V is underway.

AUDUSD, Daily

Daily AUDUSD Aug 02 2016

On the lower time frame, we see that Aussie has been trading higher at the start of this month, towards the 0.767 area, from where a 230 pip drop occurred, giving us the idea that the corrective blue wave 2 may be completed. That said we labeled this first impulsive decline as red wave 1) and its contra-trend development as wave 2) that seems completed, as the price made a nice sharp overnight reversal towards the 0.7500 region from our Fibonacci ratio, which could suggest that more weakness could be in the cards in the seasons to come.

AUDUSD, 4H

4h audusd Aug 02 2016