AUD/USD - Still Respecting Long-Term Uptrend

Price action on AUD/USD, a daily chart of which is shown, has continued to respect a long-term uptrend support line (extending from March lows) despite the recent U.S. dollar strengthening that has occurred against the major currencies. Yet another bounce up off this support line occurred on Friday (10/02/2009), and price currently appears to be shooting to re-test strong resistance at the 13-month high around 0.8850 that was reached late last week.

Although this currency pair is still in a strong uptrend, it is currently entrenched within a clear consolidation. A break of this consolidation could take one of two forms. An upside breakout above 0.8850 should confirm a continuation of the current uptrend, shooting first for resistance in the 0.8950 price region. The long-term upside target resides around the 0.9850 long-term high, which is a key 138.2% Fibonacci extension of the current uptrend.

A downside breakout of the current consolidation should breakdown below the noted uptrend support line, targeting first the key 0.8500 support/resistance price region. Incidentally, there is also currently some bearish divergence between price and the Stochastics oscillator, as shown on the chart.

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