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(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, has made a third bounce up off a key uptrend support line extending from the March lows. This occurs within the context of a continuing sideways consolidation that is also plaguing several other dollar-based currency pairs.
Currently, after the noted trend-line bounce, price has reached a short-term downtrend resistance line extending from the failed re-test of the 0.8260 high on June 11, 2009. Any strong breakout above this short-term downtrend line should target yet another re-test of that high, which is the top of the current consolidation.
Downside support within the context of the current prevailing uptrend resides around the 0.7800 price region.
By James Chen, Chief Technical Analyst, FX Solutions
