AUD/USD 1H Chart 10/8/2012 10:30AM EDT
Double bottom: The AUD/USD formed a double bottom in the 1H chart. There was slight oversold condition shown by a bullish divergence with the RSI. However these conditions have been resolved, and price has almost reached the double bottom breakout target, with retracement to 38.2%-50% of the latest swing from 1.0273-1.0148. The RSI has also gotten back to neutral zone and as long as it holds under 60 in the 1H chart, the bearish momentum in the short-term remains.
AUD/USD 4H Chart 10/8/2012 10:33AM EDT
Bullish divergence: There is also a bullish divergence seen in the 4H chart with the RSI. A correction could be projected toward the parallel speed line to the latest support speed line, which would be around 1.0250. The RSI in 4H chart has also been bearish, so after resolving the current bullish divergence, the momentum is neutral again with bias to the downside.
AUD/USD Daily Chart 10/8/2012 10:36AM EDT
Double top: The daily AUD/USD chart shows the market in a double top development. The double top pattern can be tricky. Sometimes it is simply a flat, or expanded flat type of consolidation. Will the market come back below the near-term double bottom to complete and extend below the double top in the daily chart? A breakout projection is just above 0.97. Parity will be a psychological level to monitor. At 0.9970, we have 61.8% retracement and a previous support pivot to monitor.
A break above 1.03 makes this double top suspect. A break above the central pivot, which would probably come from a push above 1.04, invalidates the topping formation, and returns the AUD/USD to a bullish to sideways mode.