Forex Technical Update
AUD/USD 4H chart 1/24/2013 8:40AM EST
Rising Channel: I noted AUD/USD was cracking the rising channel support in the previous update. Well, the result was a failed breakout, that lead to a rally that tested a key previous resistance at 1.0578. The RSI meanwhile was stuck between 40 and 60, and really maintained a bullish stance as it held above 40 because it had previously tagged 70 as a sign of bullish momentum. Today, all this changed. The rising trendline is clearly broken, and the RSI reading is breaking below 40, breaking that bullish momentum bias.
Targets: The break has already got to the 1.0470, 50% retracement of the Dec-Jan rally. Before considering the full target of a return to 1.0344, let's consider 61.8% retracement at 1.0440, and also a pivot area around 1.04, which is near the 78.6% retracement at 1.0398.
Pullback: Watch for possible pullback, which should not climb back above 1.05 in a bearish outlook, and if it climbs back above 1.0525, this bearish outlook is really suspect, and a bullish outlook can even be considered, but it would be too messy to be confident of either direction in that scenario.
Fan Yang CMT is a forex trader, analyst, educator and Chief Technical Strategist for FXTimes - provider of Forex News, Analysis, Education, Videos, Charts, and other trading resources.
Information and opinions contained in this report are for educational purposes only and do not constitute an investment advice. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness. FXTimes will not accept liability for any loss of profit or damage which may arise directly, indirectly or consequently from use of or reliance on the trading set-ups or any accompanying chart analysis.