AUD/USD Daily chart 8/8/2013 2:41PM ET
(click to enlarge)
Bullish correction: The AUD/USD has rallied for a 3rd day in a row, a rare streak since falling from the 1.0581 April high. The daily chart shows the bearish market finding relief in August from the 0.8846 low on the year. There were some minor pivots at 0.90 and the 0.91 handle, but AUD/USD pushed through both, exposing the first key resistance pivot in the daily chart, at the 0.9320. This was also the July high.
Corrective momentum: In a decent correction that is still part of a downtrend, the daily stochastic might push back to 80, but the RSI should hold below 60. If price is near 0.9320, and stoch near 80, while RSI is near 60, consider shorting the rally. Also note a falling speedline coming down from the 1.0581 high.
Staying below 0.9320 keeps the pattern of lower lows and lower highs intact, but a break above 0.9320 will not only neutralize the bearish outlook, but introduce a short-term bullish mode as it makes a higher high – not seen since falling from 1.0581.
Fan Yang CMT is a forex trader, analyst, educator and Chief Technical Strategist for FXTimes – provider of Forex News, Analysis, Education, Videos, Charts, and other trading resources.