AUD/USD has recently begun an upward movement within the range it has been trading in since the middle of May. While this up leg is currently facing resistance from multiple Moving Averages, it is likely to continue higher towards the range highs at 0.6709. The pair’s sideways trend suggests that the upward momentum is expected to persist.
On the 4-hour chart, AUD/USD is currently being blocked by three significant Simple Moving Averages (SMA) – the 50, 100, and 200 SMAs. However, it is anticipated that the price will eventually break above this cluster of moving averages. A close above 0.6640 would confirm the possibility of further upward movement, potentially leading to a breach of the range ceiling.
As long as AUD/USD remains within the boundaries of the range, it is likely to continue oscillating. A decisive breakout of the range will be needed to signal a shift towards a more directional trend. Given the bullish trend prior to the formation of the range, an upside breakout is slightly more probable. The volatile nature of the breakout move is expected, considering that the range highs and lows have been tested multiple times.
In the event of a breakout above the range ceiling, a conservative target of 0.6770 is expected, while a breakout below the range floor would lead to an initial target of 0.6521. A decisive breakout would involve a longer-than-average candle closing near its high or low, or three successive candles of the same color cleanly breaking through the range boundaries. These targets are determined using the Fibonacci 0.618 ratio method, which extrapolates the height of the range.
Overall, AUD/USD is poised for a potential breakout from its current range-bound trading. With the trend leaning towards an upward continuation, traders are keeping a close eye on key resistance levels as they anticipate a possible shift in direction. The technical analysis points towards a volatile breakout, with targets set for both upside and downside scenarios. As the pair navigates through this range, market participants are monitoring closely for a decisive move that could signal a new trend in the making.
