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Technical Analysis: AUD/USD

Posted by Akhilesh Ganti on May 7, 2013 9:00:00 PM

The Australian dollar, propelled by the RBA's 25 basis point rate cut, broke through the key support level at 1.0220 yesterday (see Daily chart). This level now becomes resistance as bearish sentiment takes hold and suggests that further deterioration may be in the offing.This also increases the likelihood that the March 04 low of 1.0115 will be tested fairly soon which, if broken, will likely signal a longer-term weakening phase with the focus on parity and beyond. Conversely, a move back through 1.0220, 1.0323 and ultimately 1.0401 will be needed to alleviate the bearish momentum. A glance at a monthly chart shows that the price action for this pair has been forming a symmetrical triangle pattern, which by definition signals indecision on the part of investors, and the break of the 1.01 level would greatly increase the odds of a test of the lower boundary and a potential resolution for this formation.

{chart:Bloomberg}(click to enlarge)

Daily Chart

audusd 050713 D

Monthly Chart

audusd 050713 W

Topics: RBA, AUDUSD, technical analysis, Asian session


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