Forex Technical Update
The AUD/USD started the week testing the channel resistance seen in the 4H chart. After a brief period of respect during the US session, the Asian session supported the pair and brought it above the channel resistance. Now as it gears up for the US trading session, the market is testing 1.0080, near 38.2% retracement and a previous pivot area. Note the RSI reading breaking above 60 and attempting to kiss 70, a sign of loss bearish momentum and an attempt to establish a bullish one in the short-term.
A correction that holds at 38.2% retracement is likely to turn into a sideways, flat type. While a break above this opens up more likelihood of a zig zag, sharper type of correction rally. If there is resistance at 1.0080, and the market falls below the support pivot established yesterday at about 0.9960, we are in a flat and can have a bearish outlook toward 0.9670 area. With the momentum loss and market anchoring out of the channel, the bearish outlook should be in the context of at least a sideways correction. Inability to break that support pivot however keeps the door open for a sharper correction rally (to 1.02, and possibility even to about the 1.0340 area.)
Fan Yang CMT is the Chief Technical Strategist FXTimes - provider of Forex News, Analysis, Education, Videos, Charts, and other trading resources