Chart Of The Day: AUD/USD

8/22/2008 - AUD/USD - After the steep plunge in the first half of August on the AUD/USD (a daily chart of which is shown), price has consolidated into a rough inverted flag formation. For the time being, this consolidation may persist. But a strong break below the flag would indicate a potential continuation of the recent downtrend, as flags are generally considered continuation patterns after breakout. If this occurs, the 0.8500 region should serve as significant support to the downside. A move back up, on the other hand, should target the top of the flag consolidation once again, around the 0.8800 region.

James Chen
Chief Technical Analyst

FX Solutions

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(Chart courtesy of FX Solutions' FX AccuCharts. Price on 1st pane, Slow Stochastics on 2nd pane; uptrend lines in green; downtrend lines in red; horizontal support/resistance lines in yellow; 200-period simple moving average in light blue.)