The current AUDUSD structure suggests a reversal from the recent multiyear lows. It follows the completion of a bearish 5-wave primary impulse in cycle wave c.
The bullish substructure indicates that we are near the completion of primary wave ①. This impulse move consists of intermediate sub-waves (1)-(2)-(3)-(4)-(5).
With the 5-wave impulse in wave (3) recently completed we can expect a slight decline in the corrective wave (4).
Wave (4) can be a standard zigzag which is likely to end near 0.5970. Prices will be at 50% of the previous impulse wave (3) at that level.
Since we haven’t reached the wave (3) invalidation level for a valid reversal yet, an alternative scenario could also come into play.
The suggested pattern, in this case, would indicate that wave c is not yet completed.
The impulsive upside, therefore, could be the primary corrective wave ④. Also, the primary wave is a completed standard zigzag that consists of intermediate sub-waves (A)-(B)-(C).
If we get a decline below 0.5959, which is the top of intermediate wave (1), the chance that this is bearish impulse ⑤ would increase.
In case it plays out, we could see prices dropping near the 0.5504 area, which is the previous swing low.