(Chart courtesy of FX Solutions' FX AccuCharts. Price on 1st pane, Slow Stochastics on 2nd pane; uptrend lines in green; horizontal support/resistance level and chart pattern in yellow; 50-period simple moving average in light blue.)
6/16/2008 – AUD/USD – After the long uptrending AUD/USD pair (a 4-hour chart of which is shown) hit a double-top potential reversal in late May and early June, price came down significantly to break down below a key intermediate uptrend line (labeled A on the chart). After this breakdown, price action has formed an inverted pennant formation (in yellow). As pennants are most often considered short-term continuation patterns, the current pennant may be indicating a potential impending continuation of the recent downmove off the highs. Oscillators like the displayed Stochastics are lending strength to this bearish outlook, as they are beginning to turn down near overbought. In the event of a clean breakdown below the inverted pennant with follow through to the downside, the next major support resides at or near the long-term uptrend support line labeled B.
Chief Technical Analyst
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