AUD/USD (daily chart) as of March 20, 2013 has consolidated just above 1.0350 support in its attempts to move higher within the large trading range that has been in place between 1.0150 and 1.0600 for the past 8 months. The last turn within this sideways range was to the upside off of a well-formed hammer reversal candle right around range support at 1.0150. The rise after that turn targeted intermediate resistance at 1.0350, which was just broken to the upside late last week. The 200-day moving average was also broken to the upside simultaneously.
Since that breakout, price has formed the current consolidation that has pennant pattern characteristics. If this pattern is to be a continuation pattern, the key price event to watch for would be a breakout above the downward sloping upper border of the pennant, which would confirm a continuation of the intra-range bullish move towards its major upside objective around 1.0600 range resistance.
James Chen, CMT
Chief Technical Strategist
City Index Group
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