November 13, 2013 – AUD/USD (daily chart) has continued its breakdown below both a bearish head-and-shoulders reversal pattern and the key 0.9400 support level. This follows a previous inverted (bullish) head-and-shoulders pattern in July, August, and September, which reversed the long slide from April to August. The price target for that pattern, around the 0.9600 level, was reached in mid-October.
For the current bearish head-and-shoulders pattern, which has its head right around the 50% retracement of the noted April-August slide, the neckline was broken late last week along with a breakdown below the 50-day moving average and the key 0.9400 support level. This week, the pair has continued its slide and has just tentatively broken down below 0.9300-area support. Continued downside momentum could push the pair towards its head-and-shoulders target, around the 0.9060 level, which is just above the major psychological support level of 0.9000. Upside resistance now resides around the prior 0.9400 support level.
James Chen, CMT
Chief Technical Strategist
City Index Group
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