AUD/USD (daily chart) as of Monday (8/01/2011) has consolidated around the key 1.1000 psychological price region after making a tentative upside breakout last week to hit a new all-time high around 1.1078, surpassing the previous all-time high set in May at around 1.1010. After having established the new all-time high, price action has wavered and retraced back under the key 1.1000 level. This bearish pullback, within the context of the overwhelmingly bullish overall trend, could bring price back down to approach or re-test key support around the 1.0800 price region. In the event of a resumption of the overall bullish trend that breaks out above the new 1.1078 all-time high, price action in uncharted territory could begin targeting the 1.1400 price region, which represents the 161.8% Fibonacci extension of the last major bearish correction (from the early May 1.1010 high down to the late June 1.0390 low).
(Click on chart to enlarge. Forex chart key: price on 1st pane, Stochastics 14,3,3 on 2nd pane; horizontal support/resistance levels in black; uptrend lines in green; downtrend lines in red; 50-period simple moving average (SMA) in orange; 100-period SMA in brown; 200-period SMA in dark blue; Fibonacci levels in magenta.)
James Chen, CTA, CMT
Director of Technical Research and Education