AUD/NZD has been in a rally mode recently. On Wednesday, the pair skyrocketed after it hit the upside support line drawn from the low of the 12th of April, while on Friday, it emerged above the upper bound of a medium-term downside channel that has been containing the price action since mid-October. In our view, this keeps the door open for the pair to continue drifting higher, at least in the short run.
If the bulls are strong enough to stay in the driver’s seat, we would expect them to aim for the 1.0880 barrier soon. However, we would like to see a decisive break above 1.0895, a resistance marked by the peak of the 8th of February, before we get confident on larger upside extensions. Such a break is possible to set the stage for our next resistance of 1.0935, defined by the inside swing low of the 25th of January.
Turning our attention to the short-term momentum studies, we see that the RSI has topped within its above-70 zone, while the MACD, although above both its zero and trigger lines, shows signs of topping as well. These indicators detect slowing upside speed and suggest that a corrective pullback may be on the cards before the bulls decide to take charge again, perhaps for a test near the 1.0840 support, or the upper bound of the aforementioned channel.
In our view, a decisive break back below 1.0815 is needed to signal that the rate is back within the medium-term downside channel. Such a break could initially aim for the 1.0795 support level. Another dip below that obstacle could carry more downside extensions, perhaps towards the 1.0760 zone, defined by the inside swing peak of the 22nd of March.
Disclaimer:
The content we produce does not constitute investment advice or investment recommendation (should not be considered as such) and does not in any way constitute an invitation to acquire any financial instrument or product. JFD Brokers, its affiliates, agents, directors, officers or employees are not liable for any damages that may be caused by individual comments or statements by JFD Brokers analysts and assumes no liability with respect to the completeness and correctness of the content presented. The investor is solely responsible for the risk of his investment decisions. Accordingly, you should seek, if you consider appropriate, relevant independent professional advice on the investment considered. The analyzes and comments presented do not include any consideration of your personal investment objectives, financial circumstances or needs. The content has not been prepared in accordance with the legal requirements for financial analyzes and must therefore be viewed by the reader as marketing information. JFD Brokers prohibits the duplication or publication without explicit approval.
FX and CFDs are leveraged products. They are not suitable for every investor, as they carry high risk of losing your capital. You should be aware of all the risks associated with trading on margin. Please read the full Risk Disclosure.