AUD/USD Rebound from Daily EMA 200

AUD/USD (daily chart as of May 9, 2014) traded below the uptrend line (line 1) on May 2 but managed to close at the trend line, and formed a dragonfly doji candlestick pattern (red arrow on chart), indicating strong support at the session low, which was right at the daily EMA 200 (bold green moving average line).

This is the first test of the daily EMA 200 after the pair broke out above it on March 26 (gray shadow). Technically, the daily EMA 200 is an important long-term indicator. Markets trading above the daily EMA 200 are considered being in long-term uptrend.

The pair’s most recent breakout of the daily EMA 200 occurred on October 17, 2013 (red shadow). The breakout only lasted for nine trading sessions before it tumbled on October 28. Price then continued its long-term downtrend until it hit 0.8660 on January 24.

Watch closely the price action against the daily EMA 200. It is still too early to tell if the pair is entering into a long-term uptrend. For short term, we have a well-established uptrend (line 1) since January 24.

The RBA kept the interest rates unchanged in its monetary policy statement that was released today. Policy makers cut the inflation forecast to 2.75% from 3%.

Support levels below:
1st support: uptrend line 1
2nd support: daily EMA 50
3rd support: daily EMA 200

Resistance levels above:
1st resistance: 0.9390 (May 8 high)
2nd resistance: 0.9460 (April 10 high)
3rd resistance: 0.9540 (November 6, 2013 high)