AUD/USD Breaks Above Short-Term Resistance

07/21/2009 12:01 am EST

Focus: FOREX

James Chen

Chief Technical Strategist, FX Solutions

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 as of Monday (7/20/2009) on AUD/USD, a daily chart of which is shown, has tentatively broken out above a short-term downtrend resistance line extending from the recent major high in early June.

This trend line breach could be hinting that the bearish consolidation, which has been in place since early June, has simply been a correction within a continuing overall uptrend. An uptrend continuation would not be confirmed, however, unless a significant breakout above the 0.8260 uptrend high were to occur. In this event, a further major resistance target to the upside resides in the important 0.8500 price region.

Key downside support currently continues to reside in the well-tested and respected 0.7700 support/resistance price region.

By James Chen, chief technical strategist, FX Solutions

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