In overnight trading AUD/USD surged by almost 2%. This is the largest single-session up-move since the end of the previous up trend in January this year. As the chart above shows, this is highly significant given the amount of technical information it generates:

  1. The move breaks the 9 month downtrend that has seen the AUD/USD tumble from above 80 US cents to recent lows close to 70 US cents.
  2. The move completes a double bottom reversal pattern (and a "W" reversal pattern)
  3. The move also broke the resistance line of the "W" at 0.7150 (green line)
  4. The break upward follows divergence with the RSI at the bottom of the chart. While AUD/USD made a second low at a similar level (green arrows), the RSI made a clearly higher low.
  5. Despite the positive moves, the RSI around 65% is NOT indicating overbought.

These factors combined point to the beginning of a new uptrend for AUD/USD. Nothing is guaranteed in markets, and a fall below 0.7150 would wipe out this positive signal. Nonetheless, while AUD/USD remains above 0.7150 the technical outlook is positive, highlighting the potential for the pair to move significantly higher.