Technical analysis of AUD/USD
After the formation of a double top the AUS/USD market reversed and has been trading in a tight downtrend channel since the beginning of March. The Australian dollar lost ground at the end of the last week, after Chinese GDO figures came in below the market forecast. Despite Tuesday’s strong session, with stock markets and commodities rising on the whole, there seems to be room for further downside. At 1.0375 this morning the Aussie is giving back yesterday’s gains as the market can’t seem to maintain any traction above 1.0412 and it is drifting downwards. With a bearish alignment of the 20 EMA below the 50 EMA on the daily chart and the 89 SMA acting as major resistance above the current market level, the downtrend appears intact. As the downward trend in the relative strength index reinforces the bearish forecast for the market, the pair could continue to give back the advance from earlier this year and revert back towards the 0.9930 area, the 38.2% Fibonacci level from the 2012 low to the 2011 high, as it searches for support. In the alternative scenario, a daily close above 1.045 could trigger a bullish reversal and open the door towards the 1.06 area.
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