Australian Dollar Breaks Out: Bullish Momentum on AUD/USD

Today’s technical piece brings us an evolving situation on the Australian dollar to American dollar (AUD/USD), where a decisive breakout on Friday has shifted the sentiment firmly in favor of the bulls.

Since mid-April, this pair had been stuck in a sideways consolidation, reflecting indecision and low momentum. However, the price gradually formed a tightening pennant pattern, marked with red lines—typically a continuation formation that precedes a breakout. Given the weakening U.S. dollar across the board, the stage was set for a bullish move.

That breakout arrived on Friday, with price surging through the upper boundary of the pennant, confirming a long-term buy signal. This move is significant in both technical and macroeconomic terms, as it highlights growing pressure on the U.S. dollar and returning demand for risk-oriented currencies like the Australian dollar.

While it’s typical to expect a brief bearish correction or retest following such a breakout, the broader sentiment remains positive as long as the price stays above the pennant structure. The breakout confirms the buyers’ control, and any short-term dips may be seen as opportunities to re-enter the trend.

The key level to watch on the downside is the orange horizontal support. A price drop below that support would invalidate the breakout and trigger a strong sell signal.

Source: https://www.axiory.com/analytics/technical-analysis/australian-dollar-breaks-out-bullish-momentum-on-a