Hello traders! Previously we discussed the upside potential of AUD/NZD currency pair. However, the recent price action shows, that currently, sellers are dominating and obviously are in control of the price action.
AUD/NZD is trading within the ascending channel applied on the 1H chart. We can witness a clean bounce off the middle trendline of the channel. At the same time price has rejected the 200 Simple Moving Average, after which it produced a new lower low.
This is clearly a bearish tendency and it is likely to continue. At the very least price should test the bottom of the channel, although key support is located at 1.0626. This support is based on two Fibonacci retracement levels. First is a 23.6% retracement level of the Fibs applied to the April 28 – May 1 correction down. The second is a 261.8% retracement level of the Fibs applied to the corrective wave up where the middle trendline and SMA were rejected. The downside target also corresponds to the previous support formed between 5-14 May.
However, if price reaches and breaks below the 1.0620 area, this might confirm a long term trend reversal for AUD/NZD. In this case, the price should continue the downtrend and the decline could be quite substantial.
Bias: Strongly bearish while below 1.0750
Potential Resistance Zone: 1.0700 – 1.0720
Potential Targets: 1.0626
Have a profitable trading!