Chart of the Day - 2/03/2010 – AUD/USD

2/03/2010 - AUD/USD - Price action on AUD/USD, a daily chart of which is shown, continues to languish in a sideways consolidation, although the last couple of weeks have been decidedly bearish for the pair. After price reached strong resistance around 0.9325 in mid-January (just shy of the 15-month high around 0.9400 that was hit in mid-November 2009), the directional bias has been steeply bearish, forming a well-defined short-term downtrend resistance line. In the process of this bearishness, the pair has fallen below 0.8950 region support, and has approached further support in the 0.8730 price region, which was the level of the last major low hit in late December. With continued bearishness in the pair that breaks down below the 0.8730 price region, the current sideways consolidation will have been broken, with a possible new downtrend in the making. In this event, further key support to the downside resides in the 0.8500 price region. Upside resistance within the context of the current bearishness resides around the noted 0.8950 support/resistance price region.

James Chen, CMTChief Technical StrategistFX Solutions

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