AUD/USD – Building breakout momentum?

Can it take the next step?

The Aussie dollar has performed well against the greenback since early February and while it appeared to have lost some momentum recently, it may have rediscovered that today.

The pair ran into resistance around the late-October highs last week and has been in consolidation since but as you can see today, it’s spiked higher and the MACD and stochastic on the 4-hour chart suggest there’s some momentum behind the move.

The fact that we never saw much of a pullback from those highs may suggest the mood is particularly bullish around the pair, something that may become evident if we do see a significant break above 0.7550.

If we do see that breakout, the next major area of resistance could be around 0.78, although there will be significant tests prior to that.

For example, we could see momentum slip around 0.76 again, which has proven a notable area of support and resistance in the past, as has 0.77 which was the mid-point of the range the pair traded in for most of the first half of last year.

If the pair fails to build on today’s momentum, it could trigger further profit-taking, at which point 0.73 and 0.74 could become very interesting with the former marking the low of the 200/233-day SMA band it broke above a few weeks ago.

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Craig Erlam

Craig Erlam

Senior Market Analyst, UK & EMEA at OANDA
Based in London, Craig Erlam joined OANDA in 2015 as a market analyst. With many years of experience as a financial market analyst and trader, he focuses on both fundamental and technical analysis while producing macroeconomic commentary. His views have been published in the Financial Times, Reuters, The Telegraph and the International Business Times, and he also appears as a regular guest commentator on the BBC, Bloomberg TV, FOX Business and SKY News. Craig holds a full membership to the Society of Technical Analysts and is recognised as a Certified Financial Technician by the International Federation of Technical Analysts.
Craig Erlam