By: Mike Kulej
It would seem that the AUD-USD pair stopped the free-fall, which took it from 0.9400 to under 0.8100. During the last few days, this pair created a possible bottom and rebounded to 0.8500. This might look like a beginning of new bullish trend. However, so far there is very little evidence to support it. For the moment, this behavior is more like a bear market rally than a trend reversal.
The market should provide additional clues about its phase, when if it gets to 0.8575 level. Earlier in the year, this level was a major support during the AUD-USD advance. Now, that the price is on the other side of 0.8575, the old support can become a new resistance, in a “change of polarity” effect.
Bullish minded traders should watch this level for evidence that market is breaking trough it easily. Those who want to short the AUD-USD might want to do it when a bearish reversal pattern forms close to 0.8575 on the daily chart. Regardless of one’s opinion for this pair, it will be tested at this level, making it important to watch by all AUD-USD traders.
Old Support Changes into Resistance on a Daily AUD-USD Chart
DailyForex.com