Australian Dollar/U.S. Dollar Technical Update 15/1/2012

The recent Forex relative strength charts (not to be confused with the RSI indicator) are showing that the Aussie dollar is at present the strongest individual currency, from the majors, when referencing monthly and weekly timeframes and only ousted by the neighbouring New Zealand dollar on the daily timeframe. 

With this in mind it is interesting to see the 4 hour charts giving a pattern closely resembling an ascending triangle.  A sustained break above the horizontal resistance would be in-line with the higher timeframe trend.  There is of course the danger that the U.S. dollar will be seeing strong flight to liquidity based flows this coming week after the Standard & Poor’s Rating cut late on Friday and this could be to the detriment of AUD/USD.   However, if the market chooses to run with the recent upside AUD/USD trend a breakout to the upside could potentially be the start of the next wave higher for the currency pair.

• Any move to the upside would need to contend with 1.0500 psych round number in the first instance.
• The 1.0750 area held price to the downside on two previous occasions when referencing the weekly chart below and could once again provide an obstacle over the coming weeks if price breaks strongly to the upside.
• A failure to break higher could see AUD/USD bears once again focus on the 1.000 parity level. 
• The ascending trend line has seen 3 touches with the last one coming late on Friday as AUD/USD staged a late recovery following the sharp drop.

AUD/USD 4 hour chart

AUD/USD weekly chart