The Australian dollar has squeezed into an increasingly tight range all year. Futures traders may want to be ready in case a breakout occurs.
First, Bollinger Bandwidth is near long-term lows on both the daily and weekly charts. This isn’t necessarily bullish, however it’s interesting when you consider other positive forces at work. One of those items is the dovish Federal Reserve and weak U.S. dollar. Another is the ongoing rallies in materials like copper and iron ore. The Australian dollar typically follows those commodities .
Diplomatic tensions with China are currently holding back the Aussie. However, that creates the potential for a breakout if things improve.
Next, consider the stair-stepping price action…