AUD/USD rebounds from long-term support
James Chen October 2, 2014 7:06 PM
<p>AUD/USD (daily chart shown below) has rebounded conspicuously from key support around the 0.8660 level. Wednesday’s low of 0.8662 was only slightly above the major […]</p>
AUD/USD (daily chart shown below) has rebounded conspicuously from key support around the 0.8660 level. Wednesday’s low of 0.8662 was only slightly above the major multi-year low of 0.8659 that was hit in late January.
The fact that the currency pair bounced almost precisely at its last major low indicates a relief rally at a key demand level after almost a month of virtually uninterrupted declines.
Early September saw the beginnings of a precipitous drop from the 0.9400 level in the midst of exceptional US dollar strength.
The current bearish technical bias for AUD/USD has been reinforced by the fact that the 50-day moving average re-crossed below the 200-day moving average last week, a significant technical event that has not previously occurred since March of 2013.
Now that AUD/USD has hit its downside support target and tentatively rebounded from it, the currency pair is at a critical juncture. Currently, the bearish trend bias remains intact despite the rebound. Any further upside recovery should be limited by major resistance levels around 0.8850 and then 0.9000.
To the downside, with any breakdown below the noted 0.8660 support area, further key support targets reside around 0.8600 and then 0.8300.
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