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Forex Analysis: AUD/USD Breaks Below Key Wedge Pattern

AUD/USD Daily Chart

AUD/USD (daily chart) has broken down tentatively below a large rising wedge formation that has been in place since the October 1.0150 area low. This breakdown of the wedge pattern occurs after price has been unable for the past week to breach the important 1.0450 upside resistance level, which was also around the 61.8% Fibonacci retracement of the last major bearish run from the September 1.0600 area high down to the October 1.0150 area low. The wedge breakdown has placed AUD/USD near both the 200-day moving average and the key 1.0300 level to the downside. In the event of a further breakdown below the 1.0300 area, price could move towards yet another downside re-test of the key 1.0150 price region, in which case it could be positioned for a possible run down towards parity (1.0000).

James Chen, CMT
Chief Technical Strategist
FX Solutions

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James Chen

James Chen

James Chen is Chief Technical Strategist for City Index Group. He is also a Chartered Market Technician. He is the author of the books: "Essentials of Foreign Exchange Trading" (John Wiley & Sons, 2009) and "Essentials of Technical Analysis for Financial Markets" (John Wiley & Sons, 2010). Mr. Chen writes currency analysis, leads forex trading seminars and has appeared in numerous major financial media outlets, including CNBC, Bloomberg TV, Forbes, Reuters, Dow Jones, and the Associated Press.