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Click to Enlarge
(Price on 1st pane, Slow Stochastics on 2nd pane; horizontal
support/resistance levels in yellow; uptrend lines in green; downtrend lines in
red; 50-period simple moving average in light blue.)
Price action beginning the new week on AUD/USD, a daily chart of which is
shown, has retraced all the way down to a key uptrend support line extending
from the March lows before making a pronounced bounce up off the trend line,
tentatively respecting the current prevailing uptrend.
This bullish price action represents the fifth instance of this currency pair
respecting the trend line. Continued bullishness off this bounce would be
displayed on a strong breakout above the short-term downtrend resistance line
extending from the 0.9325 14-month high. In the event of this breakout, the next
major upside target resides around that 0.9325 high.
And in the event of a further break above that high, the key upside
resistance target to watch for would be the all-time high around 0.9850, which
coincides with an important 161.8% Fibonacci extension (the low-to-high
Fibonacci span being measured from the low on 10/2/2009 to the 14-month high on
10/21/2009).
By James Chen, chief technical strategist, FX
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