The AUDUSD has been moving higher within a channel since July 12th. Yesterday, the integrity of that channel was broken (see chart above) . The price accelerated the trend to the upside. However, there was some reluctance to extend and with the dollar strength today, the price has wandered back into meat of the support and resistance borderlines.
The decline has so far moved to the bottom trend line of what would be a bull flag if the price holds (see chart above). Should that level give way (at 1.0378), I would expect the bias to shift more negative/corrective. The next target would be the bottom longer trend line at the 1.0366 level. The 50% of the last trend leg higher also comes in at the level. As if that was not enough, the level also corresponds with the broken 61.8% level of the move down from the 2012 trading range (see daily chart below). Needless to say, this would be a key level for the pair. Bears – looking to take back some control from the bulls – would need to push the price below this level. If done, traders will likely look toward the 100 hour MA (blue line in the chart above at 1.0335). The price has been above the 100 hour MA since July 13th.
So far so good for the bulls. Until the 1.0378 level is breached, the longs remain in control.
