AUD/USD (daily chart as of September 26, 2013) broke out above the resistance zone of 0.9315-0.9385 on September 18 and reached a high of 0.9527. However, the subsequent trading sessions from September 19 to 25 wiped out all the gains of September 18, which is a potential warning sign of weakening upside momentum. Price is currently testing the mentioned resistance (now support) zone, and it needs to hold 0.9315 to strengthen the trend reversal with higher highs and higher lows in the making.
As we have mentioned, 0.9315 is the last significant high point of the prior downtrend. Note that 0.9315 is now also close to the EMA 20. If price respects 0.9315 as a strong support level, it could turn up to test 0.9527 again, followed by a potential test of the EMA 200 or 0.9630/60, which is the projected target for the inverted head and shoulders pattern. In the event of a resistance/support zone test failure, the key support levels below are the EMA 50 or 0.9220/30, followed by 0.9110 or the neckline.
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