AUD/USD Breaks Down on Daily Chart

04/22/2009 10:04 am EST

Focus: FOREX

James Chen

Chief Technical Strategist, FX Solutions

(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 on AUD/USD, a daily chart of which is shown above, has broken down well below a short-term uptrend support line extending up from March lows. This occurs after price made a false break above the 0.7265 double-tested level, creating what amounts to a third test of resistance in the process.

Monday’s (4/20/2009) substantially bearish price action broke cleanly below the short-term uptrend support line, but has recovered much of its losses as of Tuesday (4/21/2009). Any continuation of the bearish breakdown below the mentioned uptrend line should target the key 0.6800 support/resistance region to the downside.

Upside resistance continues to reside around the noted triple-tested resistance zone, which currently resides in the 0.7300 region.

By James Chen, Chief Technical Analyst, FX Solutions

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