Technicals | Jun 10 2010
By Rudi Filapek-Vandyck
The TechWizard has observed how the AUD/USD tumbled from 0.9375 to as low as 0.8090 over the past few weeks; a serious correction indeed and without any doubt much larger than most experts would have expected.
The lower level happens to be key support for the Aussie dollar, points out the Wizard, adding this level marks the 38.2% retracement from the October 2008 crash low of 0.6000 to the April 2010 high of 0.9375.
At present, AUD/USD seems to be trying to find a base in between 0.82-0.83 but the TechWizard remains unconvinced. If the Aussie dollar cannot find a way to rally higher, he says, and to rally higher sooner rather than later, he predicts the currency is likely to sink below key support and thus on its way to 0.77.
In case the latter support level would give away -not anticipated at this point in time- the proverbial flood gates would open and AUD/USD would be staring at 0.6000 again, he says.
In the current context, the Wizard notes the 20 moving average is acting as overhead resistance. This probably means that any attempt to rally will stop at around 0.9000.
The TechWizard is the pseudonym of Scott Morrison, whose experience in financial markets exceeds twenty years. Morrison operates his own website nowadays at www.techwizard.com.au
