AUD USD retreats from rally highs

AUD/USD (see daily chart below) has tentatively retreated from a recent two-week-long rally that brought the currency pair up to a high of 0.9066 on Wednesday.

That high was just slightly short of the previous high in mid-January of 0.9076.

The fact that the pair has tentatively turned back down at this key resistance area lends strength to a potential resumption of the bearish trend that has been in place since the April 2013 high near 1.0600.

Although the pair has been above its 50-day moving average for more than a week, it’s still well below its 200-day moving average, which suggests a continued bearish bias.

Within the current rally, a few price areas remain the key support/resistance levels to watch.

To the upside, the noted 0.9066-0.9076 zone continues to be the most important near-term resistance area.

If the pair is subsequently able to break out above this resistance, a further rally within the overall downtrend should be in order, with further upside resistance around the 0.9150 level and the 200-day moving average.

To the downside, the 0.8850 level should serve as intermediate support, with late-January’s three-and-a-half year low of 0.8659 serving as the major downside support level.

A breakdown below that level should begin to target further downside objectives around 0.8600 and 0.8300.

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