AUD/USD further advance impeded by resistance
James Chen February 24, 2014 8:32 PM
<p>The AUD/USD (daily chart) for the past two weeks has been unable to make a significant upside breach of key resistance around the 0.9075 level, […]</p>
The AUD/USD (daily chart) for the past two weeks has been unable to make a significant upside breach of key resistance around the 0.9075 level, which was first established as a key high in mid-January. There was a close approach of that resistance level two weeks ago, followed by a slight breach of it last week, before the currency pair failed and retreated to the downside. AUD/USD’s attempt to emerge from late January’s three-and-a-half-year low of 0.8659 comes within a strong bearish trend, currently still intact, which extends back to the April 2013 high near 1.0600. Two opposing scenarios could likely occur for AUD/USD that should provide further directional guidance for the pair.
First, the noted 0.9075-area resistance represents a clear 38% Fibonacci retracement of the last major downtrend – from October’s 0.9757 high down to January’s noted 0.8659 long-term low. Continued failure to breach this 0.9075-area resistance could signify a move towards continuation of the entrenched bearish trend, with further downside support targets around 0.8600 and then 0.8300. The second scenario shows a potential inverse head-and-shoulders pattern (left shoulder at mid-December’s low, head at late January’s long-term low, and right shoulder yet to be determined), which could portend a potentially disruptive bullish run with upside resistance targets around 0.9150 and then 0.9300.
StoneX Financial Ltd (trading as “City Index”) is an execution-only service provider. This material, whether or not it states any opinions, is for general information purposes only and it does not take into account your personal circumstances or objectives. This material has been prepared using the thoughts and opinions of the author and these may change. However, City Index does not plan to provide further updates to any material once published and it is not under any obligation to keep this material up to date. This material is short term in nature and may only relate to facts and circumstances existing at a specific time or day. Nothing in this material is (or should be considered to be) financial, investment, legal, tax or other advice and no reliance should be placed on it.
No opinion given in this material constitutes a recommendation by City Index or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although City Index is not specifically prevented from dealing before providing this material, City Index does not seek to take advantage of the material prior to its dissemination. This material is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.