Chart of the Day - 8/13/2010 – AUD/USD

[James Chen]

8/13/2010 – AUD/USD – Price action on AUD/USD (a 4-hour chart of which is shown) as of Friday (8/13/2010) morning has formed what could potentially be an inverted flag pattern, a consolidation/continuation pattern that often occurs in the midst of a bearish move like what AUD/USD has been experiencing for most of this week. This pattern occurs after price hit a 3-month high just above 0.9200, then broke down below a well-formed uptrend support line extending from the early July double bottom low, and then finally approached its downside support target around the 0.8900 price region. In the event that the current flag pattern is broken decisively to the downside, followed by a breakdown below 0.8900, bearish momentum could begin targeting key downside support in the 0.8600 price region.

James Chen, CMT
Chief Technical Strategist
FX Solutions

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(Chart courtesy of FX Solutions' FX AccuCharts. Price on 1st pane, Slow Stochastics on 2nd pane; horizontal support/resistance levels in yellow; uptrend lines in green; downtrend lines in red; chart patterns in white; 50-period simple moving average in light blue.)