By Mohammed Isah of fxtechstrategy.com
: Having closed lower on Tuesday, the Australian dollar/dollar followed through lower in early trading Wednesday, increasing the risk of further weakness toward 0.8943 and 0.8904, its Nov. 27 and Nov. 1 lows, respectively.
(The only risk to this will be a break back above the pair's invalidated trendline and then the 0.9404 level).
A clean violation of the 0.8943 and 0.8904 levels will neutralize the pair's pattern of higher highs and higher lows and turn the focus to the Oct. 1 high at 0.8857 and then the Oct. 2 low at 0.8567. The daily studies are bearish and trending lower, supporting this view.
In order for the pair to escape its present downside vulnerability, it must break and hold above its year-to-date high at 0.9404. That would cause the pair to resume its medium-term upward trend toward 0.9592, the July 27, 2008 high. After that, it could target 0.9790, its July 20, 2008 high.
Overall, unless the AUD-USD can break and hold above the 0.9321/0.9404 levels, we expect downside risk toward 0.8943/0.8904 and even lower.
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.