Chart Of The Day: AUD/USD

9/05/2008 - AUD/USD - From a longer-term perspective on the AUD/USD daily chart, as shown, we can see that as of Friday morning in New York, price has closely approached and tentatively retreated from a very significant support/resistance level around the 0.8000 region (as represented on the chart by the yellow horizontal line). This level has been tested and respected several times as resistance in past years, but not yet as support (until Friday morning’s price action). Therefore, this is currently the key level to watch. Within the context of the remarkable plummet that has occurred in this pair for the last month and a half, price has broken numerous significant support levels on its way down. The current 0.8000 level may just be another flimsy barrier that is summarily tossed aside, or it may represent a true obstacle to the freefall. Any strong breakdown of this support level should target further key support around the 0.7680 region. A clear bounce and subsequent correction, on the other hand, could target major resistance around the 0.8500 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.)