If AUD/USD range conditions in the last few weeks resembles GBP/USD, its because AUD is by far more closely aligned with GBP than USD. AUD sets prices based on USD then as it trades, it becomes aligned in movements with GBP since AUD derived from the GBP tradition. AUD on its own is not sure if it should align fully in the GBP or USD camp so because its stuck between, AUD is a hybrid currency and as an aligned currency pair, its more married to GBP than USD. Viewed till the end of the curve, AUD is still stuck in range bound ways without big sudden moves expected. I see its price move as a slow grind with overall direction down.
The larger picture reveals AUD/USD range is caught between thick resistance at 0.7135, 0.7137 and 0.7139 then rough supports from 0.6899 – 0.7007. Specifically, 0.7007, 0.6995, 0.6978, 0.6901 and 0.6899. Above, 0.7030, 0.7042, 0.7058 and 0.7130’s. The points at 0.7130’s is holding AUD from moves to 0.7248 and 0.7260. Below 0.6899 is holding AUD from moves to 0.6700’s and lower. 0.6400’s could very well be seen in time.
AUD/USD. Bottom. 0.6983. Range break above 0.7042 and 0.7058, Below 0.7007, 0.6995. Overbought sell point 0.7042. Strategy. Longs above 0.7019, Target 0.7042 then reverse short to 0.7930. Watch closely ranges at 0.7030 and 0.7042. Points on the way up, 0.7021, 0.7032, 0.7042.
Shorts below 0.7018, Target 0.7000, Watch 0.7007 range point. Then comes Bottom at 0.6983 but range point 0.6995.
Watch the range points and take the breaks.
Brian Twomey Inside the Currency Market, btwomey.com