AUD/USD Bullish Butterfly at Important Powerline

• Weekly and Daily: Looking at the weekly, we see the market penetrated the 78.6% retracement with the rally since March. That rally however shows topping action and poised for a reversal. A possible target for a reversal would be the 50% retracement of 0.7800 area. The stochastic has finally broken below the overbought levels and is heading towards the neutral zone.
• Looking at the daily time-frame, we see that the pair is testing an important intermediate support at 0.8850-0.8900. It has reached the powerline with 3 very aggressive bearish candles, but is stalling in this Friday session. Note that the stoastic is very bearish, but is in slightly in the oversold zone. These are indications that the market may want to break  this support level.<><>>H<> The 4H time-frame shows a more detailed look at the pair in December. At the 0.8850 area, we are basically at a completed bullish butterfly. The manner this butterfly developed is interesting, and may be broken down in the Elliott Wave count below.<><>ote that the impulsive (i-ii-iii-iv-v) waves are bearish, while the corrective (a-b-c) waves are bullish.<><>ne scenario is that the current support at 0.8850 will open up next week, and the market will tumble towards first intermediate support at 0.8200 (38.2% retracement). If the market breaks below, it may be prudent to wait for a correction before considering further decline due to the oversold conditions.<><>nother scenario is shown below. If the support and butterfly completion provides the bullish interest, the market may have a short-term rally to start the week. If there is a rally, it’s not a bad idea to consider it a  a kickback. A possible manner is the “abc” wave towards 0.8950-0.9000. This area would be coincident to a downsloping trendline as well. >l<>I> the market tops off here and shows bearish signals, it is likely that the market has no more bullish interest above 0.9000, and therefore the break below 0.8850 may be more likely as well. >/ >p<<>p<<><> >an Yang<><><> >/<><>C>rrency Analyst >ommodity Trading Advisor<>p<I>formation and opinions contained in this report are for educational purposes only and do not constitute an investment advice. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness. CMS will not accept liability for any loss of profit or damage which may arise directly, indirectly or consequently from use of or reliance on the trading set-ups or any accompanying chart analyses.<>p<F>reign currency trading is not conducted on an exchange. CMS is acting as a counterparty to its clients’ transactions and as a result, CMS’ interests may be in conflict with its clients. Since CMS acts as the buyer or seller in the transaction one should carefully evaluate any trade recommendation provided by CMS or any of its solicitors. Foreign currency trading involves a substantial risk of loss and may not be suitable for all investors.<>p<A>l screenshots are made from VT Trader 2.0 and are of actual market data at the time of the screenshot. <>d_>_noise___100 >