May 6, 2014 – AUD/USD (daily chart) has rallied from key support around the 0.9200 level during a general U.S. dollar sell-off in early Tuesday trading. This major 0.9200 support level, last hit a month ago in early April, is presently being reinforced by both the 50-day moving average as well as a solid uptrend support line extending back to January’s 0.8659 multi-year low. The current bounce off this strong support has fortified the general rebound from extreme lows in AUD/USD that has been in place for the past three months.
As of early Tuesday’s rally, the currency pair has been rising to approach key upside resistance around 0.9400, as well as the five-month high of 0.9460 that was last reached just over three weeks ago. A continued resumption of the current uptrend after April’s pullback should push AUD/USD towards its primary upside target around 0.9600. This 0.9600 level is both the technical pattern target for the recent inverted head-and-shoulders pattern as well as the 50% Fibonacci retracement of the major bearish trend from the 1.0600-area high a year ago down to the noted January 0.8659 multi-year low.
James Chen, CMT
Chief Technical Strategist
City Index Group
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