AUDUSD spent most of 2011-13 overbought, trying to push convincingly past the 1.618 extension of the drop from 1997 to 2001.  It finally fell back to earth starting in May 2013, dipping for the final time below the 1.618 and subsequently taking out the 1996 high, the yellow .786 and, most recently, the yellow .618.While the .618 is a preferred reversal target for such patterns, the downside might not be complete.

continued for members…Note that AUDUSD hasn’t found solid Fib footing on the white grid constructed by the rise from 2008 nor the one from 2002.  The white .886 at .06584 would make a much better reversal point, as would the gray .786 at .0614.

The white .886  at .06584 has an advantage in that it would make for a better fit with the big purple channel and, if it hurries, even fit with the falling white channel.  It would also fit well with the notion of a DX rise to the top of the white flag pattern at 99.366.

If I’m wrong, and the .618 at .6897 holds, then we’d likely see a rebound up to the yellow .786 at .7474 — also a channel line backtest.