The Australian dollar has developed a strong breakout above the upper edge of a long term trading band.
This breakout comes at a time when the Australian market is one of the weakest performing globally. It lags the U.S., U.K., German, Singaporean, Taiwanese, Malaysian and Korean markets by substantial amounts.
It's not economic strength that is driving this breakout.
The Aussie strength is a direct consequence of weakness in the U.S. dollar, which in itself reflects the deep disillusionment with President Donald Trump's policies and endless tweets that defy reality.
The trading band is the most significant feature on the AUD chart. The upper edge of the trading band near $0.775 was established in April 2016. The lower edge of the trading band near $0.715 was first tested in June 2016. The trend behavior since then has been weak with the Australian Dollar essentially moving sideways.
In November 2016 the Australian dollar retreated strongly from resistance near $0.775 and by December that year was testing the support level near $0.715. The rebound rally from this level confirmed the strength of the trading band.