The AUD/USD pair has bounced back and forth within the range since March, but it appears to be considering a breakout in the near future.
The pair has been wandering around resistance at the 0.6800 handle for quite some time, as you can see from the 4-hour chart below.
This will be the fourth attempt to break through the ceiling in the past few months. Will we succeed this time?
If the bullish break sustains, the price can rise to at least as high as the range pattern.
That’s about 200 pips!
But what do technical indicators tell us?
While the moving averages are still oscillating reflecting the sideways price action, the SMA seems to be turning upwards and the 100 SMA could be headed for a bullish crossover.
The Stochastic is at a mid-level, which also suggests a consolidation, but a further move up would confirm the return of upward momentum.
However, if the bears still win, the AUD/USD could retreat to the bottom of the range at the .6600 mark, or at least to the middle hotspot.
The latter is in line with the dynamic support in the moving averages and could be a viable support zone.
Keep in mind that the USD has been under some selling pressure lately as traders are wary of ‘moderate recession’ risks, banking contagion issues and debt ceiling issues.
In contrast, the AUD has been supported by the RBA’s relatively upbeat policy stance and rising gold prices.
Still, if the risk-off trend returns, the safe-haven dollar could benefit, so watch out for major shifts in market sentiment.