December 12, 2013 – AUD/USD (daily chart) has broken down below key support at 0.9000, establishing more than a three-month low for the pair. This occurs within a sharp bearish trend that has been in place for the past seven weeks since the head-and-shoulders pattern high of 0.9756 that was hit in late October. That high was a 50% retracement of the steep plunge from April to August. Just last week the pair declined to the major 0.9000 support level, but respected it with a slight rebound.
The current breakdown below 0.9000 extends the bearish trend with a clear target immediately to the downside at 0.8850, which was nearly a three-year low that was established in early August. A further breakdown below 0.8850 would confirm a continuation of the overall bearish trend from April, with a further downside objective around the 0.8600 support level. If there is a daily close below 0.9000, upside resistance within the current bearish run would tentatively reside around that 0.9000 former support level.
James Chen, CMT
Chief Technical Strategist
City Index Group
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