Forex Technical Update
The currency markets have been steaming against the commodity currencies since Wednesday's FOMC statement. The weekly AUD/USD chart shows a major decline materializing against a long-term trend that started in October 2008. It fell below the parity level and is sliding towards the 0.97 2011-low. The weekly chart also shows the RSI reading falling below 40. If it stays below 40, instead of a sharp rejection here, the long-term bullish momentum is killed. If 0.97 is broken along with this signal, the next level of support could be the 2009 high just above 0.94. The daily chart shows that the 0.94 level is also the 161.8% extended retracement of the August correction rally from 0.9926 to 1.0764. The confluence of an important pivot and this fibonacci extension should provide a major source of support.
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Fan Yang CMT
Chief Technical Strategist