There is clearly some indecision in AUDUSD at the moment, with speculation that the Reserve Bank of Australia could cut interest rates only adding to the uncertainty that already exists thanks to a hesitant Federal Reserve.
From a technical standpoint, the pair looks like it could be on the verge of a very significant break above the long term channel resistance. The recent correction following a decent rally at the start of October doesn’t currently appear to be anything more than that. What we have is something that resembles a flag or falling wedge, a bullish continuation pattern.
Moreover, 0.72 appears to be well supported at the moment. The pair did trade briefly below here at times but on each occasions the move below was bought into which has established quite a solid base between 0.7180 and 0.72.
With rate decisions to come from the Federal Reserve and RBA in the next eight days, the pair is likely to break out of this consolidation period fairly soon as, at the very least, we should get some more clarity out the monetary policy outlook.
If we see a break through the descending trend line – 5 September 2014 highs – and the 100-day simple moving average, this would be very bullish and suggest the long period of declines has come to an end, at least for a while.
The next notable resistance area could come around 0.7530-0.76, where the 233-day SMA crosses through a prior region of support and resistance.