- AUD/USD is trapped in a sideways channel on the weekly chart.
- A range breakout looks likely with the impending death cross on the monthly chart.
The AUD/USD pair is reporting a month-to-date gain of 1.94% at press time. Even so, the outlook remains neutral as the pair is still trapped in a four-month sideways channel on the weekly line chart.
A weekly close above the channel resistance at 0.6946 is needed to confirm a bullish breakout. That would open the doors for 0.7250 (target as per the measured move method).
On the flip side, a channel breakdown would imply a resumption of the sell-off from September 2018 highs above 0.81.
Range breakout likely
The 50-month average looks set to cross below the 200-month average and confirm a death cross (bear cross) next month. A monthly chart death cross is a big-time lagging indicator and often marks major bottoms.
Also, prospects for the Australian economy have brightened with the ostensible US-China trade accord and the odds of an RBA rate cut in February have dropped below 50%, courtesy of Thursday’s upbeat jobs data.
Hence, the probability of AUD witnessing a range breakout is high.