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AUD/USD Appears Overbought
09/22/2009 12:01 am EST
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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.)
As with other dollar-based currency pairs, AUD/USD, a daily chart of which is shown, has begun to show signs of some dollar recovery after the pummeling that the greenback has been taking against several currencies in the past couple of weeks.
After reaching a high of 0.8775 late last week, this overbought pair fell substantially both right before last week’s close and on this week’s open. Still within the context of a marked uptrend, price is now approaching both a key uptrend support line extending from March lows as well as major support in the 0.8475 price region.
If these key levels are not broken to the downside, the bias is still towards an uptrend continuation if price can reach above 0.8775 at some point in the near future. On any breakdown of the noted uptrend support line and 0.8475 level, however, the currently prevailing uptrend that has been in strong effect since March will have been seriously jeopardized. In this event, key further support resides around the 0.8150 price region.
By James Chen, chief technical strategist, FX Solutions
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