The AUDUSD currency pair has broken out above the 0.6586 resistance level, extending its impressive upside move from the 0.6361 low to a high of 0.6646 in recent trading sessions. The pair is now trading within the confines of a rising price channel visible on the 4-hour chart.
Uptrend Remains Intact Within Channel
As long as the AUDUSD pair remains above the rising channel support, the path of least resistance appears to be further gains. The next key upside target for the bulls is the 0.6720 area.The bullish momentum has been strong, with the pair making a sustained push higher after the breakout above 0.6586 resistance.
Channel Resistance Could Cap Rallies
However, the AUDUSD is now facing potential resistance from the top of the rising price channel on the 4-hour chart. This channel resistance could potentially lead to a pullback and consolidation period in the coming days as the pair works off some of its overbought conditions following the rally from 0.6361.
Key Support Level to Watch
In the near-term, the first level of support to watch on the downside is at 0.6565. A breakdown below this level could see the AUDUSD pair retrace back toward the bottom of the rising price channel.While the broader uptrend remains intact as long as channel support holds, a move below 0.6565 would be an initial signal that a more significant consolidation period could be underway.
Upside Momentum Remains Strong
For now, the AUDUSD uptrend remains firmly in place, with the path of least resistance pointing to further gains toward the 0.6720 target if channel support continues to hold.
However, traders will want to keep a close eye on the 0.6565 support area and the top of the rising price channel for potential signs that a consolidation period may be ahead after the pair’s impressive rally from 0.6361.
The AUDUSD has staged an impressive technical breakout, but now faces a key test at channel resistance. The direction of the next big move could depend on whether the pair can clear this barrier or if a pullback and consolidation unfolds first.