AUDUSD ready to fall hard

Hi, I'm back.  I have been working on an Australian equities based project and have neglected my blog - apologies.

In time I will discuss what we are doing in Australian equities but for now let's revert to our currency posts - especially since we could be at a very important crossroads for the AUDUSD.

In my last post of 4 June, the AUDUSD had started its .8100 to .8550 range trade.  It has, over the intervening time, continued to trade in that range with a break to the topside last night testing .8675.

Crucial to determining where we are with the Aussie is the test of the lows on 8 June of .8080.  From an EWT perspective, that move down was 5 waves.  It could have been 5 waves down for a c of B, in an ABC upwards corrective - interpretation strongly bearish.  Or it may have been a failed 5th wave in the series down from .9300 - interpretation very bullish. 

The AUDUSD chart at right focuses on this activity from 21 May to last night.  The whole thing looks very much like a three wave correction to me.  The only question being whether the C up to .8675 is finished or not.  The inference of this count is that the AUDUSD still has at least a test of .7500 on the cards.  .8675 is the .618% correction of the fall from .9030 which makes the (i) of 3, (ii) of 3 count plausible to me.

As always only time will tell and again as always, if you want to come along for the ride you have to buy a ticket.  What will cause the bearish scenario to evolve - any number of things but watch out for the CPI numbers tonight in the U.S.  The AUDUSD doesn't like deflation and if that is what the numbers begin to suggest again then the currency will go lower.

All of this has implications for Australian shares as well.  I'm short AUDUSD around here, and have my helmet firmly strapped on.  This is not going to be an easy one but as long as .8700ish holds it I'm going with the bearish scenario.

Frank