The AUD/NZD pair is pressing against a major support area after a 7-week sell-off. As can be seen on the weekly chart, below, this currency pair is hovering dangerously around the 1.05 handle – the low it had reached back in January. Slightly below this key level is the 2005 low at 1.0425. This makes the 1.0425-1.0500 range a key support area. Therefore a potential break below here may lead to follow-up technical selling which could send rates sharply lower as the year-end approaches. There’s potential for price to even reach parity at some point in the near future should the bears win this battle at the third time of asking. However, given that the AUD/NZD has already lost some 800 pips over the past seven or so weeks, there is also a good chance that rates may stage a rally here on short-side profit-taking and/or opportunistic buying. Conservative traders may therefore wish to wait for confirmation before pulling the trigger. As mentioned, a (daily closing) break below this range would be a particularly bearish outcome. The buyers on the other hand will want to see the formation of a bullish-looking pattern here, for example a hammer, doji or a bullish engulfing candlestick. The bullish argument is bolstered by the fact that the MACD is in a state of positive divergence. However the bears would point to the fact the MACD has crossed the signal line to create a bearish crossover, which, as its name suggests, is anything but bullish.
Figure 1:
Source: FOREX.com.
General Risk Warning for stocks, cryptocurrencies, ETP, FX & CFD Trading. Investment assets are leveraged products. Trading related to foreign exchange, commodities, financial indices, stocks, ETP, cryptocurrencies, and other underlying variables carry a high level of risk and can result in the loss of all of your investment. As such, variable investments may not be appropriate for all investors. You should not invest money that you cannot afford to lose. Before deciding to trade, you should become aware of all the risks associated with trading, and seek advice from an independent and suitably licensed financial advisor. Under no circumstances shall Witbrew LLC and associates have any liability to any person or entity for (a) any loss or damage in whole or part caused by, resulting from, or relating to any transactions related to investment trading or (b) any direct, indirect, special, consequential or incidental damages whatsoever.
Recommended Content
Editors’ Picks
EUR/USD clings to modest gains above 1.0650 ahead of US data
EUR/USD trades modestly higher on the day above 1.0650 in the early American session on Tuesday. The upbeat PMI reports from the Eurozone and Germany support the Euro as market focus shift to US PMI data.
GBP/USD extends rebound, tests 1.2400
GBP/USD preserves its recovery momentum and trades near 1.2400 in the second half of the day on Tuesday. The data from the UK showed that the private sector continued to grow at an accelerating pace in April, helping Pound Sterling gather strength against its rivals.
Gold flirts with $2,300 amid receding safe-haven demand
Gold (XAU/USD) remains under heavy selling pressure for the second straight day on Tuesday and languishes near its lowest level in over two weeks, around the $2,300 mark in the European session. Eyes on US PMI data.
Here’s why Ondo price hit new ATH amid bearish market outlook Premium
Ondo price shows no signs of slowing down after setting up an all-time high (ATH) at $1.05 on March 31. This development is likely to be followed by a correction and ATH but not necessarily in that order.
US S&P Global PMIs Preview: Economic expansion set to keep momentum in April
S&P Global Manufacturing PMI and Services PMI are both expected to come in at 52 in April’s flash estimate, highlighting an ongoing expansion in the private sector’s economic activity.