Is AUD/NZD Ready to Resume the Downtrend on the Daily Chart?
Context on AUD/NZD Technical Factors
On July 30 and November 22, the AUD/NZD pair encountered significant resistance, reaching the 1.1150 level. The price's failure to break above this resistance has resulted in the formation of a double top on the daily chart. The candle on November 22 also indicated a false breakout of this resistance, signalling a notable influx of selling pressure. On November 29, AUD/NZD broke below its nearest uptrend line on the daily chart, prompting a decline to 1.0925 before recently rebounding to 1.1050, the level where the uptrend line was breached.
The current price level of 1.1050 aligns with the 50% Fibonacci retracement of the recent decline and represents the same area where the uptrend line breakout occurred. This suggests that once support is broken, it may serve as resistance going forward.
Key Elements of Analysis for AUD/NZD:
Possible Short Entry
Given this confluence of factors, there is a possibility that AUD/NZD may resume its downward movement in the coming days, especially if the price manages to close below 1.1000 on the daily chart.
Possible Targets:
The next support levels that could serve as potential targets include:
1.0880: This level acted as support in August and September, representing an approximate target of 120 pips. It is also in line with a rising trend line established since March 2020.
1.0780: This level was a support point on September 9, offering a potential target of approximately 220 pips.
Alternative Scenario: Bullish Reversal
An alternative scenario may unfold if the AUD/NZD breaks and closes above 1.1065 on the daily chart. In this case, the price could continue to rise towards historical resistance at 1.1150. A successful breach of this level could see the pair advance towards the next resistance at 1.1250.
Important Considerations
Investors should pay close attention to the upcoming release of New Zealand GDP data on December 18, as this could significantly impact the AUD/NZD pair. Additionally, key news concerning the Trade Balance for NZD should also be taken into account.
In summary, AUD/NZD is at a critical juncture, with technical indicators suggesting the potential for a downward move. Traders should closely monitor price action, particularly around the 1.1000 level, while remaining aware of upcoming economic data that could influence the market.
Disclaimer
74% of retail investor accounts lose money when trading CFDs with this provider. Consider whether you understand how CFDs work and if you can afford the high risk of losing your money. Past performance is not indicative of future results. Investment values may fluctuate, and you may not recover your initial investment. This content is not intended for residents of the UK.
On July 30 and November 22, the AUD/NZD pair encountered significant resistance, reaching the 1.1150 level. The price's failure to break above this resistance has resulted in the formation of a double top on the daily chart. The candle on November 22 also indicated a false breakout of this resistance, signalling a notable influx of selling pressure. On November 29, AUD/NZD broke below its nearest uptrend line on the daily chart, prompting a decline to 1.0925 before recently rebounding to 1.1050, the level where the uptrend line was breached.
The current price level of 1.1050 aligns with the 50% Fibonacci retracement of the recent decline and represents the same area where the uptrend line breakout occurred. This suggests that once support is broken, it may serve as resistance going forward.
Key Elements of Analysis for AUD/NZD:
- Double Top Formation: Indicates buyers’ inability to maintain prices above 1.1150.
- Break of the Uptrend Line: Confirmed decrease in upward momentum.
- Fibonacci Confluence: The breakout level coincides with the 50% Fibonacci level of the recent downtrend.
Possible Short Entry
Given this confluence of factors, there is a possibility that AUD/NZD may resume its downward movement in the coming days, especially if the price manages to close below 1.1000 on the daily chart.
Possible Targets:
The next support levels that could serve as potential targets include:
1.0880: This level acted as support in August and September, representing an approximate target of 120 pips. It is also in line with a rising trend line established since March 2020.
1.0780: This level was a support point on September 9, offering a potential target of approximately 220 pips.
Alternative Scenario: Bullish Reversal
An alternative scenario may unfold if the AUD/NZD breaks and closes above 1.1065 on the daily chart. In this case, the price could continue to rise towards historical resistance at 1.1150. A successful breach of this level could see the pair advance towards the next resistance at 1.1250.
Important Considerations
Investors should pay close attention to the upcoming release of New Zealand GDP data on December 18, as this could significantly impact the AUD/NZD pair. Additionally, key news concerning the Trade Balance for NZD should also be taken into account.
In summary, AUD/NZD is at a critical juncture, with technical indicators suggesting the potential for a downward move. Traders should closely monitor price action, particularly around the 1.1000 level, while remaining aware of upcoming economic data that could influence the market.
Disclaimer
74% of retail investor accounts lose money when trading CFDs with this provider. Consider whether you understand how CFDs work and if you can afford the high risk of losing your money. Past performance is not indicative of future results. Investment values may fluctuate, and you may not recover your initial investment. This content is not intended for residents of the UK.
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