Double Top for AUD/USD

07/28/2009 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 on AUD/USD, a daily chart of which is shown, has finally reached up to (and was tentatively rejected by) key resistance in the 0.8260 price region, which represents the highest high in the current uptrend that was reached in early June.

This level is of substantial technical importance, as the way in which price interacts with this support/resistance region should dictate whether or not there will be an uptrend continuation in the currency pair. Any strong subsequent breakout above the 0.8260 level should confirm this uptrend continuation, with a major upside resistance target in the 0.8500 price region.

Conversely, if the 0.8260 level is respected and not breached in any significant manner, major downside support in the event of another pullback or consolidation continues to reside in the key 0.7700 price region.

By James Chen, chief technical strategist, FX Solutions

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