AUDUSD—resistance held

As I wrote yesterday, the resistance at.9316 was an important one and AUDUSD topped out at .9313 before turning down again. I shorted at .9306 and just took partial profits at +70 pips.

Ever since AUDUSD broke above its downtrend line from Nov. '09 (with touches on Jan. 14 and Mar. 17), it has been trading in a fairly narrow, downward sloping range of .9158 to .9364. The pair has to break above that if it's going to resume its climb upward. A clear break above there would be good for the bullish view and the pair could reasonably target .9406 to and .9579

As of now, both .9313 and.9364 will probably bring out more sellers, especially those who went long yesterday morning and are now just hoping that the pair returns so they can gracefully exit.

However, lest those who are short get overly excited, it's worth remembering that there are layers of support approaching. .9202 is the prior downtrend line from November; .9200 is a round number; .9189 is an uptrend line from February; and .9176 is a shorter-term uptrend line. If it breaks below all of this then .9118 is the daily 55 SMA and .9068 is the daily 100 SMA. These levels are bound to bring out buyers.

RSI is coiling so watching momentum is important.

Here's the three-hour chart:













© Dianne Fecteau, 2010. No part of this material may be reproduced in any form, or referred to in any other publication, without the express written permission of the author.

My purpose in writing this blog is to show you how one trader, me, makes trading decisions and survives while trading Forex. One of the biggest problems I had when I first started trading was trying to apply the “rules” to actual trades. Another was the psychology—limiting losses and letting profits run. If you study my blog, you’ll see how I deal with both those issues. So my writings are not trade recommendations but rather educational in purpose. You have to decide on your own approach to trading. Remember that trading is risky.