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AUD/NZD Retreats - 2 Key Supports for the Bullish Scenario

The AUD/NZD has been in consolidation in the medium-term, as we can see in the daily chart. In fact, as price tags 1.13 and retreats this week, it looks like the consolidation resistance is in play.

AUD/NZD Daily Chart 8/17
(click to enlarge)

The daily chart shows the pair at consolidation resistance. The question of course is whether it will break upwards. Consider these points: 1) The overall technical picture is bullish with price above the 200-, 100-, and 50-day simple moving averages and with bullish candles showing dominance vs. bearish ones. 2) The RSI held above 40 after tagging above 70, showing maintenance of the bullish momentum. 3) The latest bounce of 1.11 broke the pattern of swings going up and down. Instead it showed that bulls might be back in control of the pair, ready for a bullish continuation breakout.

This is just my opinion - that AUD/NZD is ready for the breakout. Let's take a closer look at the price action.

When we look at the 1H chart we can see that price is retreating after a bullish breakout last week. The bullish outlook has at least the 1.1428 high on the year in sight, with risk of breaking  higher in extension of the prevailing uptrend since at least April.

AUD/NZD 1H Chart 8/17
(click to enlarge)

Now, it looks like price is coming up at a key support area around 1.1180-1.12. This is a support/resistance pivot area, and where the last of the SMA cluster resides. There is also a rising speedline from last week. Holding above this trendline can still confirm last week's bullish breakout, which keeps the bullish continuation breakout in the daily chart in play. 

AUD/NZD 4H Chart 8/17
(click to enlarge)

Looking at the daily chart, we can see that below 1.1180, there sort of a last line of defense around 1.1150. A break below this level would clear a rising trendline from late July, and clear 200 and 50-period SMAs. If the 4H RSI also dips below 40, then our bullish continuation breakout will need to be shelved for further consolidation - bearish correction. In this bearish outlook, the 1.0880 low will be in sight with risk of further downside risk in the short-term.