Last week AUDNZD briefly managed to push off a critical support zone around 1.0940/50, before sellers swamped the pair once more. Given the imbedded weakness in this pair it seems that it may only be a matter of time before AUDNZD breaks through the aforementioned support zone, but we cannot ignore the sheer strength of said support.
All the talk of possible fundamental NZD weakness and AUD strength doing the rounds are making investors pretty nervous about pushing AUDNZD through the all-important support zone around 1.0940. The idea that bulls will leap to the rescue of AUDNZD if it breaks that support zone is making the bears anxious. In saying that, a break here could just as easily trigger an avalanche in price with more and more sellers joining the slide on its way down.
It’s impossible to say exactly what will happen, but from a purely technical perspective we see further weakness if the aforementioned key support zone is broken. Some recent medium-term bullish indicators have been ignored by the market and now the tide appears to be turning. A few momentum indicators on different timeframes are now in bearish territory and there appears to be room to the downside.
Still, it may be too early to call for a collapse in price without a confirmed break of support around 1.0940. In the event that price does materially break through this level, we will have our eyes on the pair’s 200-day SMA. A quick push through here will add weighted to this possible bearish scenario. A push above resistance around 1.1020 may negate this view.
Source: FOREX.com
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