AUDUSD could be in for a reversal from its long-term climb as price is forming a head and shoulders pattern on the daily chart. Price has yet to test and break below the neckline around .7650 to confirm that a selloff is due.

The chart pattern spans around 300 pips, so the resulting drop could be of the same height. However, technical indicators appear to be suggesting that the climb could still resume.

For one, the 100 SMA is above the 200 SMA indicate that the path of least resistance is to the upside or that support levels might still hold. In that case, AUDUSD could recover to the shoulders around .7800 or the head at the .8000 major psychological mark.

Stochastic is on the move up, so AUDUSD could follow suit as buyers remain in control. The oscillator has plenty of room to climb, so bullish pressure could stay in play for a bit longer.

On the other hand, RSI is heading south, so price might still follow suit until oversold conditions are met.

There are no major reports due from the Australian economy, so this pair might take cues from overall market sentiment. Risk appetite could mean gains for the higher-yielding commodity currency and losses for the safe-haven dollar while risk aversion could mean the opposite.

Fed head Powell has a number of speeches lined up in the first half of the week, so these could also bring in dollar volatility. Note, however, that he has been clear about not needing to adjust monetary policy in order to curb the surge in bond yields, so the US currency could be under downside pressure unless he turns hawkish.

Risk appetite might turn sour if more headlines indicate increased COVID-19 cases from the mutated strains of the virus, as well as problems in vaccination efforts.