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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 just descended back down to an uptrend support line extending from an early-March low. This occurs after price bounced up off the line several times just last week. Like other dollar-based currency pairs, AUD/USD is currently entrenched within a rather prolonged consolidation.
An emergence from this consolidation could take two forms. For one, a clean breakdown below the noted uptrend line would be a significant bearish indication that could eventually target further support in the 0.7850 support/resistance price region. To the upside, the 0.8500 level is the area to watch, as any strong breakout above would confirm an uptrend continuation, potentially targeting further upside resistance in the 0.8800 price region.By James Chen, chief technical strategist, FX Solutions
