(Price on 1st pane, Slow Stochastics on 2nd pane; uptrend lines in green; downtrend line in red; 200-period simple moving average in light blue.)

9/15/2008 – AUD/USD – As of Monday morning (New York session) price action on the AUD/USD daily chart, as shown, has continued to respect the steep downtrend resistance line that has been in place since late July. This is despite a slight poke above the line that occurred in the early hours of Monday’s trading. Any downward continuation of the pullback to resistance should meet strong support around 0.7900, the level of the last swing low.

If price subsequently breaks down below that support level, a continuation of the steep downtrend will have been confirmed, and the next immediate support level below that resides around the 0.7800 level, which is where the long-term uptrend support line is currently located. On the upside, the steep downtrend line should continue to serve as resistance for the short-term. Any strong break and close above this line should initially target the 0.8350 region.

James Chen

Chief Technical Analyst, FX Solutions

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