AUDUSD—close to resistance

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. It's approaching the downtrend line of that range this morning, .9316. It's currently offered at .9308 (8:07AM EST). A clean break above that would be meaningful and could be encourraging for a long position but there is still nearby resistance at .9364 and my suspicion is that selling will enter as it approaches that level. A clear break above there would be good for the bullish view and the pair could reasonably target .9406 to .9579.

Looking at a short, the risk is that .9364 but support is at .9220 and then a cluster of support at .9176 (short-term uptrend line from 4/19), .9121 (daily uptrend line from Mar. 2009), .9118 (55 SMA on the daily), and .9067 (100 SMA which has served as prior support). Paying atttention to momentum is important as you consider any trade with this pair.

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.