Into the valley of death rode the six hundred and the Light Brigade emerged tattered but victorious, according to Tennyson.
The same story can be applied to the Australian dollar which at the beginning of 2016 looked to be heading towards $0.635 after a fall below the primary support level near $0.715. We suggested it was poised on the ledge of the valley of death. There were good short trades but in the longer-term, the Aussie has battled higher and retested $0.775.
The long and steady decline in the Australian dollar from $0.93 to $0.69 has paused and developed a significant reversal pattern. This is a classic Guppy Multiple Moving Average (GMMA) trend reversal. This has seen a test of the downtrend, a retest and breakthrough and then a retest and rebound. All these features are found in the GMMA display on the Australian dollar.
The test of the lower edge of the long-term GMMA developed in December 2015. The test and breakout above the upper edge of the long-term GMMA developed in April 2016. The retreat dropped below the lower edge of the long-term GMMA and this indicates a degree of trend breakout weakness. However, the Aussie is currently moving above the upper edge of the long-term GMMA and this is bullish.