AUD/USD Trading In a Resistance Zone Before Fed

AUD/USD (daily chart as of September 18, 2013) broke above the revised neckline (bold red line on the chart) of a potential inverted head and shoulders reversal pattern on September 9, and also broke above the EMA 20 and EMA 50 for the first time since the steep downtrend started back in mid-April. The currency pair has been making higher highs and higher lows since August 5, and it appears that the EMA 20 is about to make a bullish crossover above the EMA 50, which is potentially another bullish signal.

Price needs to hold the EMA 20 and EMA 50 and clear the strong resistance zone of 0.9315-0.9385 to validate the inverted head and shoulders reversal pattern. If that is the case, the projected target for the pattern would be around 0.9630/60 (calculation: (0.9280 – 0.8847) + 0.9200 = 0.9633), or the EMA 200. If price cannot break above the resistance zone, it could turn down to test the EMA 20 and EMA 50, and then potentially the neckline. More complex price action might be expected in the event of a neckline test failure.