Price action on AUD/USD (a daily chart of which is shown) as of Wednesday, December 29, has risen to approach the extremely long-term (decades long) high around 1.0180 that was just hit in early November.
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(Price on first pane, Slow Stochastics on second pane; horizontal support/resistance levels in yellow; uptrend lines in green; downtrend lines in red; chart patterns in white; 50-period simple moving average in light blue.)
This bullishness occurs within the context of a clear parallel uptrend channel extending from the mid-year lows. From a currency strength perspective, the Australian dollar has been among the very strongest of the major currencies for the year 2010 when its percentage price change is compared against the other currencies.
This has been clearly manifested in the AUD/USD chart. With parity now acting as tentative support within the current bullishness, if the uptrend continues into next year, a breakout above the noted 1.0180 long-term high could look to target further upside around the 1.0600 price region on a longer-term basis.
In the absence of precedented price levels above 1.0180 within the last several decades, the 1.0600 price region is a 161.8% Fibonacci extension of the most recent bearish retracement.
By James Chen, chief technical strategist, FX Solutions
