October 23, 2013 – AUD/USD (daily chart) has stalled and pulled back after rising up to reach and slightly exceed the 50% Fibonacci retracement level of the long and steep plunge from the April high near 1.0600 resistance down to the August 0.8850 area low. This 50% recovery comes off an inverted head-and-shoulders pattern reversal with its low at the noted 0.8850 support level. After the neckline of that head-and-shoulders pattern was broken to the upside in early September, the currency pair began to stage a recovery that has just culminated in the current attainment of the 50% retracement.
Wednesday’s price action saw the pair reach a high at 0.9757, slightly above the noted 50% level, before pulling back to the downside from the resistance imposed. Currently, the pair is just below its previous upside resistance target of 0.9650. If AUD/USD is able to turn around and continue its recovery above 0.9650 and the 50% retracement level, key further objectives to the upside include the 0.9850 and then parity (1.0000) levels. Current downside support tentatively resides around the 0.9500 area.
James Chen, CMT
Chief Technical Strategist
City Index Group
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