In today’s technical analysis, we focus on the Australian Dollar to US Dollar (AUD/USD) pair, which is now heading into its second consecutive week of consolidation.
The price is trapped within a tight sideways range, marked clearly by the red rectangle on the chart. Earlier this week, we saw a brief attempt to escape the range to the upside, but the breakout quickly failed, triggering a reversal and a test of the lower boundary. That bounce has so far held, keeping the pair locked within its horizontal corridor.
This indecision may not last much longer. With today's highly anticipated Non-Farm Payrolls (NFP) release from the United States, volatility is likely to spike. Such a major macroeconomic event could serve as the catalyst needed to break the current standoff and initiate a directional move.
A daily close above the upper boundary of the rectangle would confirm a buy signal, suggesting a bullish continuation. Conversely, a close below the lower boundary would be a strong sell signal, pointing to a bearish breakout and further downside potential.