Substantial Breakout for AUD/USD
11/10/2009 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.)
Substantial dollar weakening this week has just approached the 14-month high for AUD/USD, a daily chart of which is shown. This occurs after price action broke out cleanly above a short-term downtrend resistance line extending from that high. AUD/USD, much like EUR/USD, continues to operate within the context of a long-term uptrend extending from March.
Also much like EUR/USD, if the 14-month high on AUD/USD (around 0.9325) is broken strongly to the upside, an uptrend continuation will have been confirmed. The key target to watch in this event would be in the 0.9800-0.9850 price region, which represents both the all-time high for the pair as well as the 161.8% Fibonacci extension of the most recent bullish run.
The noted long-term uptrend support line extending from March lows should continue to provide dynamic support for the pair going forward.
By James Chen, chief technical strategist, FXSolutions.com