(Chart courtesy of FX Solutions' FX AccuCharts. Price on 1st pane, Slow Stochastics on 2nd pane; uptrend lines in green; downtrend lines in red; horizontal support/resistance levels in yellow; 200-period simple moving average in light blue.)

2/26/2008 – AUD/USD – Price on the AUD/USD daily chart, as shown, is approaching a critical resistance level around the 0.9400 region, as of this writing. Prior to these heights being reached in October and November of 2007, this price level has not been seen for over two decades. After breakout of the upper red downtrend line in late January 2008, then throwback to the line again and continuation to the upside in early February, price action has formed a rather steep uptrend angle (represented on the chart by the rightmost green line). Many technical analysts may view this steeply-angled uptrend line as unsustainable, and therefore may be looking for an impending breakdown of this line. Coupled with this view is the abovementioned fact that price is approaching a key resistance level at the multi-decade high of around 0.9400. Additionally, oscillators like the displayed Stochastics are showing that price has been extremely overbought for some time now. Therefore, from purely a technical perspective, an impending exhaustion in upward momentum for the pair might be expected at or near the resistance region. If this indeed occurs, breaking down the current uptrend line, the next major support to the downside resides in the 0.9100 region.

James Chen

Chief Technical Analyst

FX Solutions

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