AUD/USD (daily chart) has tentatively dropped below an uptrend support line extending back to the June 0.9580 low and, in the process, approached the 100-day moving average around the 1.0400 price region. This occurs after the pair had been rising in a bullish trend over the past two months from the 1.0150 support area in October to approach a 2nd re-test last week of the 1.0600 resistance area. In the process of that rise, price had formed a rising wedge formation. With the breakdown below that rising wedge, AUD/USD has shown tentative respect for the key 1.0600 resistance area and could potentially continue the rangebound trading that has prevailed for the past 5 months, which has been roughly between the 1.0150 level to the downside and the 1.0600 level to the upside. In the event of a continuation of this trading range, short-term support on a continued move to the downside off 1.0600 resistance potentially resides around the 1.0300 price region, with potential longer-term support around the 1.0150 level, the bottom of the 5-month trading range.
James Chen, CMT
Chief Technical Strategist
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