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<Back to Latest Research
TECHNICAL UPDATE: AUD/USD – Boom or bust time as it tests long-term trendline support

Updated Feb 7, 2013 5:55:00 PM By Chris Tevere, CMT

The Aussie has taken a bit of a beating this week, largely on the back of a more dovish RBA rate statement as well as a weak December retail sales report (-0.2% vs. consensus +0.3% MoM), as it took out numerous key technical levels of support (not shown in chart below):

  • 1.0410/15 – Convergence of 100-day sma & bottom of daily Ichimoku Cloud
  • 1.0345/50 – December 2012 low
  • 1.0310/15 – 200-day sma

Presently, AUD/USD is testing long-term trendline support (drawn from the 2009 low) around 1.0275/85 and it finally appears to be make or break time for the Aussie. Furthermore, it looks to have formed a potential Double Top near 1.0600-25 and this in itself suggests a downside break may be imminent. Should a break below this key trendline support occur, it could open up scope to a test of the low between the double top highs around 1.0150 initially. That said, if the AUD/USD manages to bounce, it could find resistance into the previous December lows around 1.0345.

Additionally, you may want to keep an eye on the RBA’s quarterly statement on monetary policy tonight (19:30 ET) as it will contain growth and inflation forecasts. Should these projections underwhelm, it could see the market price in more near-term rate cuts – Presently, the September futures implied overnight rate is 2.54, while the RBA’s current o/n rate is 3.00% (thus nearly 50 bps worth of cuts).

Chart Source: Forex Charts by eSignal

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