AUD/USD Bounces off Daily EMA 50

AUD/USD (daily chart as of November 5, 2013) retreated from the high of 0.9756 on October 23 and formed a bearish engulfing candlestick pattern (mentioned in our October 24 analysis), which was confirmed by the subsequent bearish candlesticks. Price then broke down below the uptrend line connecting the low of August 30 and the low of October 1 (bold blue line on chart), and touched a low of 0.9420 on November 1, right at the daily EMA 50.

Current price is rising to test the daily EMA 20, which previously served as resistance during the downtrend and support during the uptrend. It appears that the currency pair has already digested the comments from the Reserve Bank of Australia (RBA) yesterday regarding the current level of the Aussie dollar as being “still uncomfortably high” following the interest rate decision that remains unchanged at 2.5%.

Note that the last significant low point is at 0.9280, and as long as price can hold that level, the current uptrend should be intact with higher highs and higher lows in the making. If price surpasses the EMA 20, it could resume upside momentum to retest the 0.9756 level. Otherwise, it could turn down to test the EMA 50 again, and then potentially the key support zone of 0.9280 – 0.9315.

Support levels below:
1st support: 0.9420 (November 1 low) or daily EMA 50
2nd support: key support zone of 0.9280 – 0.9315
3rd support: 0.9220 (multiple lows and highs)

Resistance levels above:
1st resistance: daily EMA 200
2nd resistance: 0.9756 (October 23 high) or the uptrend line
3rd resistance: 0.9790 (June 3 high)