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Forex Analysis: AUD/USD Attempts Further Rise from Lows

2014-05-14-AUDUSD

May 14, 2014 – AUD/USD (daily chart) has continued its attempts to reach higher in a push to extend the rebound from extreme lows that has been in place for more than three months. After hitting a three-and-a-half year low of 0.8659 in late January, the currency pair began a steady climb that formed both a bullish head-and-shoulders reversal pattern as well as an ascending trend line connecting price lows.

In late March, price action broke out above a confluence of resistance that included: the neckline of the noted head-and-shoulders pattern, a downtrend line extending back to April of 2013, and the 200-day moving average. Bullish momentum followed-through to hit a high of 0.9460 before pulling back to the rising trend line. AUD/USD then rebounded off both this trend line and its closely-adhering 50-day moving average, bringing the pair back up to trade around the 0.9400 level.

Currently trading just under April’s 0.9460 high, AUD/USD continues to carry a bullish bias within a strong rebound. Key downside support currently resides around the 0.9200 level, the area of the last pullback. The primary upside target remains around the 0.9600 level, which is both the technical pattern target for the noted head-and-shoulders pattern as well as the 50% Fibonacci retracement of the previous major downtrend.

James Chen, CMT
Chief Technical Strategist
City Index Group

 

Forex trading involves a substantial risk of loss and is not suitable for all investors. This information is being provided only for general market commentary and does not constitute investment trading advice. These materials are not intended as an offer or solicitation with respect to the purchase or sale of any financial instrument and should not be used as the basis for any investment decision.

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.