I’ve been following the weekly wedge on this pair for the last few months and as we know in FX markets, the longer a pair stays tied in a tight range, the bigger the breakout move will be. Taking a quick look at the daily chart, we can see that the big 4 MAs (21, 55, 100 and 200) are all lying very close together. So we either get a few more months of really tight ranges or we get a big breakout; of course I hope for the latter. Market positioning data shows that the market is totally flat, another indicator that we may soon see a move starting to build.
My preferred scenario is that we initially see a false break lower, taking the market into the low 90’s again and everyone gets short and bearish, but then we see a sharp reversal in line with terrible USD fundamentals which will take AUD/USD towards 1.20 and beyond. Well you gotta have a plan!