AUD/USD Testing 200-Day EMA

AUD/USD (daily chart as of August 20, 2014) has managed to stay above the 200-day EMA since March 26 (gray shape on chart). The pair is now testing this medium-term support line after dipping to a low of 0.9240 on August 7.

Price is also trading in a range between two narrowing uptrend lines (bold blue lines on chart), which is a potential rising wedge pattern during an uptrend, indicating possible weakening momentum. In the meantime, the RSI is making lower lows and lower highs.

If the pair is unable to hold the 200-day EMA and breaks down below the lower border of the rising wedge, it could turn down to test the 0.9085 level. In the event that price breaks out above 0.9505 and the wedge’s upper border, it may then resume the prior uptrend.

RBA Governor Glenn Stevens said during his semi-annual testimony that the nation’s economy needs an injection of confidence rather than lower interest rates. Investors will be focusing on the FOMC minutes later today, and Yellen’s speech in Jackson Hole scheduled for August 22.

Support levels below:
1st support: 200-day EMA or the rising wedge’s lower border
2nd support: 0.9085 (January 13 high)
3rd support: 0.8890 (multiple highs and lows)

Resistance levels above:
1st resistance: 0.9505 or the rising wedge’s upper border
2nd resistance: 0.9620 (October 28, 2014 high)
3rd resistance: 0.9755 (October 22, 2013 high)