The Aussie dollar looks set to move higher as the AUD/USD has formed a bullish flag pattern .
Following the rise to last week's high at 1.0184 from 1.000, the AUD/USD has consolidated its gains in the form of a bullish flag pattern.
This afternoon the pair made an attempt to break out of the pattern but failed to build on the momentum and retreated back inside the consolidation area.
Traders should be looking to go long on the AUD/USD following a confirmation of the breakout above the 1.0200 level. An estimate from the chart pattern suggests a two cent move on the breakout which would set the target at roughly 1.0370. This is above the all-time high of 1.0255 which will serve as a resistance level on the way higher.
In case of a false breakout, a protective stop should be placed inside the flag pattern near the 1.0140 level. This trade setup allows for a decent profit to risk ratio of 2.83.
Support for the AUD/USD is found at Friday's low of 1.0070. The lower line of the flag pattern should also prove to be supportive. Below this lies the support of 0.9960.