Last week, the AUDUSD reversed just pips shy of .9500. So was that [I]the[/I] top? It could have been, but patterns and Fibonacci relationships on multiple time frames suggest that the AUDUSD will make one more high in order to complete a 7 year bullish cycle.
The monthly chart of the AUDUSD displays a beautiful Elliott wave pattern. The decline from the early 1970’s was a textbook 5 wave decline. Waves 2 and 4 satisfy the alternation guideline (wave 2 is sharp and wave 4 is a flat). Wave 3 is extended and wave 5 an ending diagonal. From the low at .4775 in April 2001, an A-B-C correction has taken shape. Wave C would equal wave A (a common relationship) at close to parity (.9998 to be exact).
The weekly chart zooms in on the A-B-C advance from the 2001 low and in particular wave C from .6771 (July 2004 low). As is evident on the chart, the rally through the November 2007 high at .9400 satisfies minimum expectations for wave 5 of C. The next chart shows why we still expect a test of 1.00 before the major reversal takes place.
The 60 minute chart zooms in on the rally from .8512 (January low). The rally from .8512 is viewed as wave 5 of large C. So far, there are only 3 waves complete to .9496. The drop to channel support is wave 4 and may be complete at .9218. If .9218 fails to hold, then look the wave 4 low to form close to .9111; the former 4th wave. If price drops below .8874, then the probability increases significantly that a multi-year top is in place at .9496.