In our last update (Money Morning of 5th of August) regarding the AUD/USD, here’s what we wrote:
“There is a resistance line at 0.85. This level corresponds to a previous low (point D posted in late august last year) that become a new high (point E posted in last September). This is clearly the target before a probable correction towards 0.81 in a first time.”
What happened actually is that the currency pair posted a high at 0.8477 on August 14 then slightly corrected towards 0.8150 just a few days later. However the bulls have been driving it back on the upside, and the objective of 0.85 that we were mentioning has been reached and cleared.
This target at 0.85 was a previous low where the price action strongly rebounded in January 2008 (point A on the chart). This level was eventually cleared as the pair was plunging in September last year. It then became a new resistance level (point E) a few weeks later. This point E was the peak of a bear market short-term rally.
Two days ago, the price action closed (the FX market operates 24/7 but here we consider the Australian trading time zone as the reference) at 0.8552. This was a signal that the resistance has now been cleared and yesterday the bulls gave another push up as they drove the currency pair significantly above 0.86. This should open the door, on a medium-term perspective, to a further bullish trend. The next target identified now is 0.90.
The indicators argue for a continuation of the momentum despite potential short-term corrections. There are many trend-following strategies among FX traders and fund managers and the current configuration remains an opportunity for those market players. The moving averages crossovers system is clear: the short-term moving average (20-day) is above the medium-term one (50-day) and the longer-term one (100-day). It indicates that the trend in place remains valid. The 30-day Commodity Channel Index (CCI) has soared. The pair is not overbought yet and no major bearish divergence is detected.
That’s why the AUD/USD is likely to move higher. The immediate support is 0.85 and the next target is 0.90.
{ 1 comment… read it below or add one }
I”M STILL WAITING FOR
“AUSTRALIA IN THE RED “DVD
TO COME DOWN IN PRICE ……………………………………..
ANYONE KNOW WHEN????????????????????????????????
Leave a Comment
Comment moderation policy: Port Phillip Publishing supports free speech and frank and open conversation. But we reserve the right to modify or delete your comments if we consider them to be offensive or in violation of any laws, including Australia's anti-discrimination laws