The AUD/NZD has been consolidating since making a high of 1.0890 in May. For a few weeks now it has been drifting lower in what appears to be a flag pattern in the 4H chart, where we can see a potential bullish breakout.
The 4H chart shows price cracking the flag pattern resistance, but so far failing to clear it. It held under 1.08 and is retreating. Let’s see if price can hold above 1.07. Give it some elbow space. As long as it comes back up within the session, the bullish breakout is still in play. Now, if price climbs back above 1.08, we would have a bullish continuation breakout confirmation. The 1.0890-1.09 area would be the first target.
The 1H chart shows the bullish attempt thwarted under 1.08. Now, the RSI is still holding above 40, which indicates maintenance of the bullish momentum. Also, if price can stay above 1.07, it would hold above the 100-hour SMA, and essentially avoid falling back below the cluster of SMAs. Now, a break below 1.0675 would likely indicate a failed bullish breakout and put pressure back to the 1.0580 low.
The daily chart shows a market that has made a bullish reversal in April through May. In the short-term, if price can climb back above 1.08, we would have the 1.0918 then the 1.0976 pivots in sight.
Now, we mentioned briefly about the failed bullish attempt scenario, which would maintain a bearish outlook in the short-term. A bearish outlook in the short-term would still be in the context of a medium-term bullish outlook. Therefore, we should limit that bearish outlook to the 1.04-1.0450 area, where the 100- and 50-day SMAs should provide support, especially if the RSI is back around 40.
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