AUDUSD bulls are on the move this week in a big way.
Yesterday’s session saw the pair gain 90 pips alone, and this week is up 160 pips from its low.
If you saw last weekend’s forecast, this rally isn’t a surprise.
We know the Australian dollar closed above the 0.7400 area on December 3rd.
That 0.7400 was the former top of a range that began in late July.
Ironically, the Australian dollar’s number one counterpart, the NZDUSD, had already signaled its intentions weeks earlier.
On November 9th, NZDUSD closed above its range top at 0.6790.
We reviewed that setup on this website extensively even before it materialized.
The New Zealand dollar’s breakout occurred approximately three weeks earlier than AUDUSD breaking above 0.7400.
That was our clue that AUDUSD was likely to break higher.
Now that the Australian dollar has established itself above 0.7400 support, where might it go from here?
As I mentioned in last weekend’s forex forecast, there isn’t much standing between the market’s current price and 0.7740.
Note how 0.7740 served as key resistance between April 2016 and March 2017.
If AUDUSD bulls can secure a weekly close above 0.7740, we could see the pair trend toward the 2017/2018 double top at 0.8100.
Keep in mind that 0.8100 is 600 pips above the current price, which means it probably won’t happen until early 2021, if at all.
As for key support, I’ll be watching the area between 0.7475 and 0.7500.
I’d like to see AUDUSD bulls defend that area if tested as new support.
Below 0.7475, we have the former range ceiling at 0.7400.