The AUDUSD looks ready to break higher this week.
Will it?
Nobody knows, but as I mentioned over the weekend, the bull flag that has developed since early January has bullish implications.
We saw the Australian dollar bounce from channel support last week.
The AUDUSD also closed above 0.7640 on Friday.
If you saw last weekend’s market forecast, you know that 0.7640 was likely to serve as support this week.
Sure enough, Monday’s session bounced from 0.7650.
Those that missed that retest may want to wait, though.
As I’ve discussed for the last two weekends, AUDUSD buyers need to secure a close above channel resistance to confirm the breakout.
That means a daily close, or 4-hour at minimum, above 0.7730.
If buyers can do that, there isn’t much to stop a run at 0.7815 and perhaps 0.7930 over the coming sessions.
Looking at the price action since last November, there’s a decent chance that a breakout from this structure targets 0.8400 this year.
If the pattern below is indeed a bull flag, it means the flag pole’s logical starting point is the November 2020 low at 0.6990.
That’s 830 pips to the year-to-date high of 0.7820.
Eight hundred thirty pips higher from the February 2nd low gives us an objective of 0.8390.
We’ll see if that plays out, but either way, the AUDUSD looks increasingly bullish.
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