Thursday April 8, 2010 - 18:19:34 GMT
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FXTimes: Daily Technical Update AUD/USD: Price Action Gives Mixed Signals
AUD/USD: Price Action Gives Mixed Signals
- Daily and 4H: As can be seen in the 4H time-frame, the AUD/USD broke above an ascending triangle. I mentioned on Tuesdayâ€™s post on AUD/USD,
that we should wait for throwbacks/pullbacks especially if outlook is
against the established trend. Here the breakout is bullish and the
AUD/USD is bullish to ranging in the long and intermediate term. The
market has been bullish in the short-intermediate term as well.
- The decline ahead of the US session brings the pair back to 0.9240, just above the broken triangle.
- This can be a throwback if the market bottoms here.
- However, the fact that this occurs at the resistance zone seen in
the daily chart suggests it could also be a possible reversal signal.
- Here, we should probably look at the 1H time-frame for more clues.
- 1H: Closer inspection of the throwback price
action reveals that a completed head and shoulders, which implies
reversal, though only offers a projection in the near-term. That
near-term projection would be basically to the 61.8% retracement area
0.9215 level (width of the head to neck projected in the direction of
- The 0.9215 is also the broken resistance of the previous triangle.
So here is what the bullish scenario needs: bottoming action near
0.92150, and a rally that can break above at least 0.9280. This would
invalidate the bearish outlook suggested by teh head and shoulders.
This would also confirm in the 4H time-frame that the breakout above is
- On the otherhand, a bearish scenario would start with a break below
the 0.9215 area. The RSI in the 1H chart should also dip below 40 and
possibly enter oversold levels, which confirm bearish momentum.
- Both scenarios are quite evenly probable at this point, though I
would say there is a slight bias on the bullish side because there has
been established bullish momentum of late.
Commodity Trading Advisor
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