AUD-USD: Recovering Within Broader Bearishness

The pair remains vulnerable to the downside but could stage a move higher toward its May 28, 2010 high.
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AUD-USD: Although the pair remains vulnerable to the downside, its strong recovery higher on Tuesday followed with a bid tone in early trading today suggests a move higher toward its May 28, 2010 high, at 0.8550. On a clean break and hold above there, AUD-USD should push higher and create scope for more upside gains toward the 0.8576 level, its Feb. 5, 2010 high.

A reversal of roles is likely at this level to turn the pair back down again, but if that breaks, we should expect further recovery toward its May 6, 2010 low at 0.8704. Its daily RSI is supportive of this view.

To invalidate its current strength, a break and hold below the 0.8069/65 levels, its May 20, 2010 lows, must be established, resuming its broader medium-term weakness. This will call for further weakness toward the 0.7800 level, its psycho level, and then the 0.7704/00 level, its .50. Fib Ret (0.6008 - 0.9404 rally). This view remains consistent with its broader weakness triggered from the 0.9404 level in November 2009. However, as long as the pair continues to hold above the 0.8069/65 levels, we see risk of a recovery higher again, or a consolidation.

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

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