Tight Range in AUD/USD

By: Mike Kulej

Following a very positive labor report last week, the Australian Dollar enjoyed a strong rally. That stalled on Friday, with the AUD/USD staying in a very tight range, in relation to preceding days. Early trading after the weekend is also slow, as if the market is waiting for additional fundamental news and players are unwilling to commit themselves.
This state of affairs is unlikely to last for any extended period. One could argue that the AUD-USD is forming a short term rounded top. On the other hand, it could a consolidation zone before the next bullish swing. The hourly chart is not very convincing and could be interpreted either way. What is clear however, is that the price never remains that tight for very long and a more decisive move either way should come soon.
Current situation presents a short-term breakout opportunity. Using the high and the low of this range, a buy order could be placed above the high or 0.8780. A sell order at 0.8690 should catch a bearish price swing. No matter which way the price moves, the AUD-USD might easily travel 50-60 pips in a short order.