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AUDUSD finally made a forex breakout from the triangle consolidation pattern it has been moving in for almost a month, indicating that further gains could be in the cards. As you can see, price made higher lows and lower highs, creating a symmetrical triangle on its 1-hour time frame.
The pair recently climbed past the .8800 major psychological resistance at the top of the triangle, which is approximately 300 pips in height. This suggests that the resulting rally could be of the same size now that the forex breakout is confirmed.

Forex Breakout Risks

Stochastic is almost in the overbought area though, indicating that buying momentum might weaken soon. If this happens, price might pull back to the broken resistance area near .8800 before heading any higher. After all, the 100 and 200 SMA support zones are also in line with the triangle resistance, which might serve as a line in the sand for any near-term retracements.

A break below this support area could signal that the forex breakout was a fakeout and that AUDUSD might be back in consolidation mode. Event risks for this forex breakout setup include the FOMC statement, which could confirm whether or not the Fed is looking to hike interest rates early next year.

Bear in mind that the previous FOMC statement turned out dovish, as Fed Chairperson Yellen indicated that inflationary pressures are weak and might wind up hurting overall economic growth. Policymakers agreed that it might be too early to tighten, although the end of the stimulus program is likely to take place this week with the final taper of $15 billion.
Postponing the last set of their taper plan could lead to massive losses for the dollar, as it would show that the US central bank is increasingly worried about deflation and the threat of a euro zone recession. This could lead to more losses for the dollar and an extended rally for AUDUSD.


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