AUD/USD Testing Uptrend Support

AUD/USD (daily chart as of April 30, 2014) has traded lower after the short-term uptrend line (line 2 on chart) was breached on April 15. Price is now testing the support of the longer-term uptrend line (line 1) or the daily EMA 50. It has managed to close above this support for three days since April 28.

If the pair breaks down below line 1, it could decline further to the 38.2% Fibonacci retracement level (green parallel lines on chart) from 0.9460 (April 10 high) to 0.8660 (January 24 low), and potentially the 50% Fibonacci level around 0.9060 that is also close to key support at 0.9085. If price can hold line 1, a rebound may be expected to test recent highs again.

China’s yuan has dropped more than 3% for four months in a row, the longest monthly decline since 2007, amid concerns about China’s economic slowdown. The People’s Bank of China lowered the yuan’s reference rate by 0.1%.

Support levels below:
1st support: line 1 or daily EMA 50
2nd support: 38.2% Fibonacci retracement level or 0.9170
3rd support: 50% Fibonacci retracement level or 0.9085

Resistance levels above:
1st resistance: 0.9380 (April 22 high)
2nd resistance: 0.9450/60 (April 10 high)
3rd resistance: 0.9540 (November 6, 2013 high)