The ride up to 0.8999 was short lived indeed and not even managing to close above the 55 dma could keep the pair afloat as we fall back to the 0.8900 level. We had a test of the big figure earlier on and we pulled up just shy at 0.8907.
AUD/USD daily chart 10 02 2014
Last week I warned that the failure to take 0.90 would see us push lower and we’re seeing one of those themes where the round numbers play a big pivotal part. As 0.8900 holds we are likely to see the potential for another attempt higher. If it goes then we’ll probably see 0.88 first. While the short term trend still points down, most of the “too high” fx rate jawboning and poor(er) aussie fundamentals are mostly priced in so we could be in for a period of range trading around the 0.87/0.91 levels for while, but I still see a strong case for a bottom being put in place around the Oct 2011 support line.
Near term 0.90 is still the next level that needs to be taken and we’ve got a short term resistance line forming there from December.
0.8950 is also becoming a strong technical level as it holds the 100 mma and since falling through has provided resistance with only fleeting moves above.
AUD/USD monthly chart 10 02 2014
On a long term basis we’re roundabout bang in the middle of an upward channel so there’s certainly scope for a move lower before continuing the trend higher.
AUD/USD monthly chart 10 02 2014
That 0.70 level looks very juicy and despite my long position up here I’d love to take long from there. In the meantime we have that mid channel support line crossing the Oct 2011 downtrend support which adds to the potential strength of this bottom at 0.8650/700.
It’s still in the balance which way we go and the longer we don’t push the upper boundaries the quicker we’re likely to test the lower ones.
