AUD/USD (daily chart) as of November 7, 2012 has broken out above key 1.0400 resistance, establishing a new 6-week high in the process. This occurs within the context of a month-long bullish trend extending back to the early October re-test of the important 1.0150 support level. This also occurs within the context of a 4-month sideways trading range, where price has been bounded strongly by 1.0150 support to the downside and 1.0600 resistance to the upside. Now that AUD/USD has tentatively broken out above 1.0400 prior resistance after having made failed attempts to do so for the last 3 weeks, price action could be looking to fulfill the upper half of the trading range with another potential re-test of the 1.0600 range high, provided price is able to stay above this 1.0400 level. A move back down below 1.0400 that goes on to break down below the month-long bullish trend line could be the downside trigger for a potential bearish re-test of the 1.0150 range low.
James Chen, CMT
Chief Technical Strategist
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