AUD/USD Breaks Below Daily EMA 200

AUD/USD (daily chart as of October 24, 2013) retreated from the October 23 high of 0.9756 and broke down below the daily EMA 200, to test a short-term uptrend line that extended back to August 30 (bold blue line on chart). The Aussie is under pressure due to concerns about large bad loans being written off at major Chinese banks and a short-term rate spike, which are bearish for the Asian markets.

The candlesticks of October 22 and 23 are a potential bearish engulfing pattern, with the second candlestick’s real body engulfing the entire body of the first candlestick, which is a bearish reversal signal after an uptrend move. A lower open today at 0.9618 strengthens the warning signal, and if we have a weaker close today, it would confirm the bearish engulfing pattern, at least for the short term.

Support levels below:

1^st support: 0.9530 (September 18 high) or the daily EMA 20

2^nd support: 0.9388 (October 10 low)

3^rd support: 0.9315/9280 (key support level / September 30 low)

Resistance levels above:

1^st resistance: daily EMA 200

2^nd resistance: 0.9756 (October 23 high)

3^rd resistance: 0.9790 (June 3 high)