AUDNZD, Daily
The New Zealand Dollar is registering as one of the biggest losers on the day out of the main currencies after the Canadian Dollar. The New Zealand Dollar is showing a 0.5% loss against the Euro and a 0.3% loss against the Australian Dollar since last week. Last Wednesday, the AUDNZD rebounded from 1.6700 Support and formed by the close a bull hammer candle. This was followed by another 2 bullish Daily candles, suggesting that bulls started to gain major control of the pair after the sharp decline identified since May 25.
Yesterday, the pair formed a Doji Daily candle due to the drift in stock markets amid another crisis of confidence over the deepening trade war. The antipodean currency was supported by the increasing trade tensions and hence the pair moved slightly southwards. Today however, the sell off in stock markets seemed to run out of steam in Asia and Europe as well.
This rebound in stock markets amid an intraday pause in the risk-off sentiment had been Support for the antipodean currency and therefore AUDNZD has lifted so far to a 3-Day high at 1.0775. Today’s performance higher, rebounding from 50% Fibonacci retracement level set since April 11, is seen as another positive reaction. The pair is currently holding a 4-Day Support at 50% Fib. level at 1.0723. Meanwhile, it is retesting the 1.0780 peak, which is significantly the confluence of 50-Day SMA, the latest Daily up fractal and the 38.2% Fibonacci retracement level. This is considered be an extremely strong Resistance level with 20-Day SMA set just 6 pips above.
The momentum indicators are looking to improve again even though none of them has confirmed a cross on the positive territory yet. RSI is pushing towards 50 and Stochastic is moving higher. MACD lines are still in the negative territory, however higher lows have been noticed. Volume indicator on the other hand suggests recovery will continue as volume softly increases.
Therefore, as the technical picture looks bullish, a break above the Resistance at 1.0780 should suggest a swing back higher at May highs. Next Resistance comes between 23.6% Fibonacci level and the 200-Day SMA, at 1.0840-1.0860 area.
Nevertheless, later today a positive trade surplus number announcement out of New Zealand is likely to benefit Kiwi and a swing back lower might be seen. However, only a close today below the Support level at 1.0730 would imply that the pair is likely to fall to the edge of Bollinger Bands pattern at 1.0668, which coincides with the 61.8% Fibonacci retracement level.
A move below the last week’s low at 1.0654 would hint around 160 pips of additional losses.
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Andria Pichidi
Market Analyst
HotForex
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