AUD/USD's Future Hangs on Flag Pattern Breakout
23 January 2024
The current market dynamics for the Australian Dollar to US Dollar (AUD/USD) pair indicate a significant juncture, with potential for both bullish and bearish scenarios. The pair has been tracing a flag pattern, defined by black lines on the chart, signaling a period of consolidation following a strong movement. The upper boundary of this flag formation is the critical resistance to watch.
If AUD/USD manages to break above this flag pattern's upper resistance, it would activate a bullish signal, suggesting a potential rally towards the orange horizontal resistance line. However, the momentum could carry the pair even higher than this initial target, depending on the strength of the breakout.
Conversely, a continuation of the current trend within the confines of the flag would imply a bearish bias. This would be characterized by lower lows and lower highs within the pattern. A crucial level in this scenario is the green horizontal support at 0.653. A breach below this support could significantly alter the mid-term and long-term outlook from positive to negative, potentially driving the pair down to the blue support at 0.628.