AUD/USD 4H chart 2/12/2013 2:40PM EST
Falling channel: Since late January, the AUD/USD has been in a falling channel seen in the 4H chart. The RSI shows a bearish momentum as it tags 30 and has held under 60. Also, the moving averages are in bearish alignment with higher periods above the lower ones.
Today (2/12) we saw a pullback from a new 2013 low. As this rally develops, I wanted to take a look at what the strongest pullbacks have been since the market has been falling from the 1.06 handle.
It turns out that the strongest pullbacks have been 90+, and under 100 pips. Today’s pullback has been about 95 pips so far. Will this pattern repeat?
Scenarios: As a trader, you should probably be ready for both the yes and no answer. Yes means following the recently bearish trend after this 90+ pip pullback. However, a pullback above 100 pips could change things. Still, I would like to see price push above 1.0360, and the falling channel resistance before considering a bullish outlook. The bearish scenario has 1.0150-1.0165 key range lows in sight. A break above 1.0360 first opens up the next resistance pivot in the 1.0450-60 area.
A break of the 4H RSI above 60 would also help show loss of bearish momentum.
Fan Yang CMT is a forex trader, analyst, educator and Chief Technical Strategist for FXTimes – provider of Forex News, Analysis, Education, Videos, Charts, and other trading resources.
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