Forex Technical Update
AUD/USD Daily Chart 5/21/2012 1:00PM EDT
The AUD/USD is consolidating after cracking the support around 0.9860, one that goes back to Dec. 2011. The trend remains bearish as we make lower highs and lower lows. Meanwhile the momentum has been persistent, reflected by the RSI reading staying below 60 and tagging 30 throughout AUD/USD's May-decline.
As we start the week, the AUD/USD is essentially consolidating between 0.98 and 0.9880, although price action appears to be in a slight congestion. The RSI reading is no longer oversold, and is at neutral ground, ready for another leg down. However, if the RSI pushes above 60, it will have broken the persistent bearish momentum, especially if price also breaks above 0.9880.
In this bullish breakout scenario, a correction has a first target of 0.9950, near the highs from a previous consolidation zone as well as support of the consolidation zone before that. A break above 0.9950 can then open up the 1.00-1.0020 pivot area.
If the market instead of breaking to the upside, breaks below 0.98, the next key support to look for is 0.9660.
Fan Yang CMT is a trader, analyst, educator and Chief Technical Strategist for FXTimes - provider of Forex News, Analysis, Education, Videos, Charts, and other trading resources.
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