Forex: AUD/USD Technical Analysis – Key Trend Line in Focus
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- AUD/USD Technical Strategy: Flat
- Support: 0.8918 (23.6% Fib ret.), 0.8819 (14.6% Fib)
- Resistance: 0.9025 (trend line), 0.9079 (38.2% Fib ret.)
The Australian Dollar advanced expected against its US counterpart after forming a bullish Piercing Line candlestick pattern. The pair is now testing a falling trend line set from early December 2013, with a break higher initially exposing the 38.2% Fibonacci retracement at 0.9079. Alternatively, a turn below support at 0.8918, the 23.6% Fibonacci retracement, exposes the 14.6% level at 0.8819.
Risk/reward considerations argue against entering a trade at the moment. On one hand, prices are squarely at resistance, making the long side unattractive. On the other, a short position taken on the so far baseless assumption that resistance will hold is a dangerous proposition. We will wait for confirmation for now.
Daily Chart - Created Using FXCM Marketscope 2.0
--- Written by Ilya Spivak, Currency Strategist for DailyFX.com
DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.