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
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