AUD-USD: Reversal Signs Ahead
AUD-USD: Although we retain our bearish view on the pair for a move toward its Dec. 24, 2009 low at 0.8733, its inability to sustain losses at 0.8787 and 0.8779 levels on Monday and Tuesday may be giving us a clue of an impending corrective recovery higher.
The fact that the pair is losing downside momentum ahead of a key support at the 0.8733 level calls for caution, following its weakness triggered off the 0.9327 level, its 2010 high. However, if the 0.8733 level is decisively violated, we could see further declines shaping up toward its Oct. 2, 2009 low at 0.8567.
A loss of the 0.8733 level will also resume its declines from the 0.9404 level, 2009 high, and break its medium-term pattern of higher highs and lows. Conversely, to trigger a corrective recovery, its Feb. 2, 2010 level at 0.8924 will have to invalidated first followed by the 0.9173 level, where a cap may be seen.
Farther out, its Jan. 14, 2010 high at 0.9327 and its 2009 high at 0.9404 come in as the next upside objectives. Overall, risk remains for a decline toward the 0.8733 level and beyond.
Mohammed Isah is a technical strategist and head of research at FXTechstrategy.com, a technical-research Web site. He has been trading and analyzing the foreign exchange market for the past seven years. He formerly traded stocks before crossing over to the forex market, where he worked for FXInstructor LLC as a technical analyst and head of research before joining FXTechstrategy.com. He has written extensively on the forex market and technical analysis and his articles have been featured in The Technical Analyst Magazine, The Forex Journal Magazine, The International Business Times and FXstreet.com. At FXTechstrategy.com, he writes daily, weekly and long-term technical commentaries on currencies and commodities, which are offered to its clients. He also produces
for his subscribers. He provides full coverage of the forex market with specific focus on G10 currencies as well as the commodities markets, with focus on five key commodities.