January 16, 2014 – AUD/USD (daily chart) dropped significantly in Thursday trading, hitting more than a three-year low and dipping under the previous long-term low of 0.8818 that was established just one month ago. This drop confirms a continuation of the strong bearish trend that began in April 2013 from just below the 1.0600 level, and that continued its decline in October on a head-and-shoulders reversal pattern after a substantial 50% upside correction.
Most recently, after establishing the noted 0.8818 low in mid-December, the currency pair made a modest upside pullback to the key 50-day moving average before dropping to its current multi-year low. The past three trading days have all been significantly bearish, and the technical outlook for AUD/USD continues to remain bearish. The next major downside price target in view of the current breakdown resides around the 0.8600 support level. A further downside target level resides around 0.8300. Key upside resistance now resides around the important 0.9000 level.
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.
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