November 25, 2013 – AUD/USD (daily chart) has continued to sustain its dramatic plunge of the past week to begin approaching its multi-year depths once again. In the process, the currency pair has just established an 11-week low. The current drop occurs after the pair formed a head-and-shoulders reversal pattern with its late-October high at 0.9757. Shortly after breaking down below the neckline of this reversal pattern in early November, there was a brief pullback to the upside before the pair swiftly began its current slide.
With the downside target of the head-and-shoulders pattern very close to being fulfilled, the directional outlook for AUD/USD continues to be bearish. Overall, the substantial bullish correction that was halted by the noted head-and-shoulders pattern represented a 50% Fibonacci retracement of the long and steep plummet from April to August. Currently, clear downside objectives reside around the 0.9000 psychological support level followed by the noted 0.8850-area multi-year low. Any breakdown activity below the latter level would clearly confirm a continuation of the overall bearish trend. Key upside resistance currently resides around the 0.9300 level.
James Chen, CMT
Chief Technical Strategist
City Index Group
Forex trading involves a substantial risk of loss and is not suitable for all investors. This information is being provided only for general market commentary and does not constitute investment trading advice. These materials are not intended as an offer or solicitation with respect to the purchase or sale of any financial instrument and should not be used as the basis for any investment decision.
