May 14, 2014 – AUD/USD (daily chart) has continued its attempts to reach higher in a push to extend the rebound from extreme lows that has been in place for more than three months. After hitting a three-and-a-half year low of 0.8659 in late January, the currency pair began a steady climb that formed both a bullish head-and-shoulders reversal pattern as well as an ascending trend line connecting price lows.
In late March, price action broke out above a confluence of resistance that included: the neckline of the noted head-and-shoulders pattern, a downtrend line extending back to April of 2013, and the 200-day moving average. Bullish momentum followed-through to hit a high of 0.9460 before pulling back to the rising trend line. AUD/USD then rebounded off both this trend line and its closely-adhering 50-day moving average, bringing the pair back up to trade around the 0.9400 level.
Currently trading just under April’s 0.9460 high, AUD/USD continues to carry a bullish bias within a strong rebound. Key downside support currently resides around the 0.9200 level, the area of the last pullback. The primary upside target remains around the 0.9600 level, which is both the technical pattern target for the noted head-and-shoulders pattern as well as the 50% Fibonacci retracement of the previous major downtrend.
James Chen, CMT
Chief Technical Strategist
City Index Group
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