Forex technikal and fundamental analysis: FX Path

Jun 17, 2011

FX Path

AUD/USD Seeks Break of Triangle Pattern Consolidation

Posted: 17 Jun 2011 10:08 AM PDT

AUD/USD (daily chart) as of Thursday (6/16/2011) has consolidated into a large triangle pattern after descending along a bearish resistance trend line extending back to the all-time 1.1010 high hit in early May. The bottom border of the triangle resides around the 1.0440 price level. This triangle consolidation occurs within the context of a year-long uptrend extending back to the June 2010 low around 0.8080. Price action is currently progressing towards the triangle apex, and a strong breakout could be imminent. In the event of a continuation pattern breakout to the upside, in the direction of the prevailing trend, the key upside target is clearly a re-test of the 1.1000 area resistance high. In the event of a break to the downside, which would extend the bearish correction from the all-time high, downside support resides around the key 1.0200 support region.

(Click on chart to enlarge. Forex chart key: price on 1st pane, Stochastics 14,3,3 on 2nd pane; horizontal support/resistance levels in black; uptrend lines in green; downtrend lines in red; 50-period simple moving average (SMA) in orange; 100-period SMA in brown; 200-period SMA in dark blue; Fibonacci levels in magenta.)

James Chen, CTA, CMT
Director of Technical Research and Education
FXDD