July 15, 2013 – AUD/USD (daily chart) hit a key support low late last week just a few pips below the 0.9000 figure, establishing a new 34-month low in the process. This week has opened in a rather unspectacular manner, with the currency pair fluctuating above this long-term low and seeking further direction. The market bias for that direction appears to be strongly to the downside.
The steep bearish trend for AUD/USD since mid-April near 1.0600 resistance, and especially since the breakdowns below 1.0150 and then parity (1.0000), can virtually be classified as a free fall. The plunge has essentially consisted of substantial downside moves interrupted only intermittently by rather weak upside corrections. The most recent upside correction occurred just early last week, hitting a high just above 0.9300, but was unable to interfere significantly with bearish momentum.
The key downside level to watch continues to be the major 0.9000 support level, as a breakdown below it would confirm a resumption of the bearish trend, with further objectives to the downside around the 0.8850 and then 0.8600 support levels.
James Chen, CMT
Chief Technical Strategist
City Index Group
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