Forex Technical Update

Prev: AUD/USD Forms Another Double Top; 1.0790 is Critical Support (8/2)

AUD/USD
AUD/USD 08032011 1H chart
Double Bottom Attempt:

- AUD/USD is currently in a double bottom attempt. There is support at the 1.0670-1.0680 area. The resistance is the recently broken pivot at 1.0790. A break above 1.0790 completes a double bottom, and suggests a bullish correction to the recent sharp swing to the downside.
- The market breaks above 1.0790. look for a pullback to push no higher than 1.09, near the 61.8% retracement level seen in the 4H chart.
- The break below 1.0790 was an indication that the market is still ranging, and therefore, the range support near 1.0440 in sight.
- This fits into an expanded flat scenario, so we may anticipate a motive wave going down to 1.0440 or even lower (since it is an expanded flat).
Downside Risk:
- The 4H chart shows that this near-term bullish attempt is stemming from a test of the 200SMA.
- The next lower support is near the 1.0590 area. Below that we have the 1.0440 support. Be ready for the market to push the AUD/USD higher from this point.
- We'll have to re-evaluate at that point, but a break below eyes the 1.02-1.0250 area, the 2010-2011 high until March 2011.
- There, as we also test the 200SMA, we can expect some bullish attempt.
- Note that breaking below 1.0440, 1.04 area is already a large double top signal from the daily chart. If a pullback from the 1.02-1.0250 zone fails to break above 1.0450, we should be seeing a major topping, and reversal ahead. The parity level may be next to be tested and might not hold anymore.
- AUD/USD 8/3/2011 4H and Daily Charts

Will the RBA be prompted by inflation to reconsider moving the cash rate hike earlier to this year? Subscribe and become a member to share your views and join live discussions as well as webinars about the markets.
Fan Yang CMT
Chief Technical Strategist
FXTimes