Technical Sentiment: Bearish
Key Takeaways
- AUD/NZD formed a Lower High at 1.0870 on Monday;
- Traders are trying to further confirm the bearish movement with a Lower Low;
- The breach below 200 Simple Moving Average on 4H – priced at 1.0756 – signals more losses ahead.
With the recent rejection at 1.0909, AUD/NZD has temporarily forfeited the option of a bullish trend in favor for a large range consolidation between 1.0500 and 1.0900. On a smaller time scale the pair is showing selling pressure and it’s falling deeper into the range. Selling rallies remains the preferred strategy as the pairs will attempt to test all major support levels.
Technical Analysis
The pair traded below April 24th Low of 1.0756, technically confirming the bearish pressure initially signaled by the rejection from 1.0909 and the lower high at 1.0870. The 200 Simple Moving Average on the 4H timeframe and the 100-Day Moving Average failed to offer support during the European session, which suggests the next support levels are in play in the coming days.
The 50-Day Moving Average, 50% Fibonacci Retracement between 1.0538 – 1.0909 and the price pivot zone at 1.0730 are all clustered in the same area. 4H Stochastic is in oversold territory which suggests a small bounce is likely in this area. The preferred strategy is to sell if any bearish signals or resistance rejections follow this bounce.
A further breach below 1.0730/20 will open the way towards 1.0680, the 61.8% Fibonacci Retracement line, and ultimately the pivot zone at 1.0640.
AUD/NZD has a long way up before regaining a bullish stance, since it has to change the lower high – lower low configuration first. Initial resistance lies at 1.0825 and just above it a fresh trendline based on April 22nd and 28th highs should cap all rallies for the coming days.
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Prepared by Alexandru Z., Chief Currency Strategist at Capital Trust Markets
