Forex Technical Update
Previous: AUD/USD Breaks Above Declining Trendline (9/27)
AUD/USD 4H Chart 9/28/2012 2:25PM EDT
The AUD/USD market was not able to extend after breaking above a declining trendline on Thursday (9/27). Instead, during the 9/28 session, it found resistance at 1.0475, and fell sharply, to 1.0375 by 9/28 US session, as the market winds down the week’s trading.
Consolidation momentum: Note the 4H RSI failing to push above 60 yet again since falling from overbought levels above 70. If the RSI is stuck between 40 and 60, price action is likely in consolidation. This is the case with AUD/USD. In fact the RSI has been violating 40, and price action has a slightly bearish bias.
Breakout: Has the market completed a conventional 61.8% retracement and is turning against the bearish bias? If price can hold above the 1.0320 support pivot, we are likely sideways.
If AUD/USD doesn’t even get back to the current low just under 1.0340, and pushes above 1.0480, there is a bullish development, and we might have to refocus on the higher pivots first at 1.0515 and then he 1.0624 September high.
However, heavy price action through the 1.0320 pivot opens up support near 1.0275 and the 78.6% retracement of 1.0264, before exposing the September low of 1.0166.
Sideways market – reversion to mean: It should be noted that the overall mode seen in the 4H chart is sideways, even after the market breaks from the current mode of consolidation. The 200-SMA is flat with the other moving averages whipping up and down across it. That is a sign of a sideways market. So, as we move away from the 200-SMA, the market will have more tension to revert back toward this “mean” price level, which is around 1.04 at the moment.
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.
Information and opinions contained in this report are for educational purposes only and do not constitute an investment advice. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness. FXTimes will not accept liability for any loss of profit or damage which may arise directly, indirectly or consequently from use of or reliance on the trading set-ups or any accompanying chart analysis.
