Technical Sentiment: Bullish
Key Takeaways
- Australian employers added 14.2K in April;
- Unemployment Rate remained steady at 5.8%
- Traders focus on the resistance levels ahead, as the pair will attempt to test and break 1.0909.
Positive Australian employment data gave AUD/NZD the necessary boost at a crucial location. Disappointing data would have led to the formation of a lower high at 1.0785, followed by a deeper correction back to 1.0640. Instead, traders turn their attention back to 1.0909, with a larger target around the 200-Day Moving Average if April’s resistance fails to hold.
Technical Analysis
April’s price pivot zone at 1.0825 is the last hurdle AUD/NZD needs to break in order to open up the way to 1.0909 and above. The current rally has extended far enough that we are no longer counting on a lower high being formed. A future swing low below 1.0640 appears unlikely given the current landscape.
The pair is trading above the 50, 100 and 200 Simple Moving Average on the 4H time frame. Price broke above the resistance trendline drawn on the most recent swing highs from April, as well as the 61.8% Fibonacci Retracement between 1.0909 – 1.0643. AUD/NZD is bullish towards the resistance in this situation.
Daily Stochastic is exiting oversold territory and turning bullish. The Daily chart shows yet another higher low, adding strength to the case of a trend reversal and considerably increasing chances 1.0909 will break on the next attempt. Above 1.0909, February 4th High of 1.0941 should be crossed fairly easily, as the main target for a break-out is located much higher on the 200-Day Moving Average, currently priced at 1.1030.
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Prepared by Alexandru Z., Chief Currency Strategist at Capital Trust Markets
