AUD/NZD has been consolidating since making a low on the year at 1.0020 (just above parity. After a rally to 1.0222 in the middle of April, it started to slide again, but this time price held above 1.0040 early this week as we can see in the 1H chart.
Then, at the beginning of the April 22 session, we saw a bullish breakout above a falling trendline from that 1.0222 high. This breakout was at first rejected just below 1.0140, where the market treated he 200-hour SMA as resistance. After retreating, the market found support around 1.0075, which was a previous resistance. This was also where the 50-hour SMA resided. This price action – crossing above the 50-hour SMA and using it as support – is call a bullish slingshot signal. This essentially confirmed the mini price bottom and the bullish breakout.
The bounce off of the 50-hour SMA created an engulfing bullish candle, also an indication that the market wants to make another bullish attempt at least in the short-term. If price can clear the 1.0150 level, it should open up the 1.0222 high with risk of further bullish correction.
While the 1H chat and the intra-session outlook appears bullish, we have to remember that the prevailing trend has been bearish. In the daily chart, we can see that above 1.0222, there will be a key resistance around 1.0290. This area involves a previous support pivot, the 50-day SMA, and a falling trendline.
If price stalls around 1.0280-1.03 and the RSI holds under 60, we should still expect a bearish attempt towards parity.
Now, if the current rally extends beyond 1.03, and the daily RSI pushes above 60, we can start considering the bullish reversal outlook. For now, bulls are in control in the near-term, and we can expect further upside, but we should limit it to 1.03.
Previous Post by Author: EUR/GBP in a Bearish Continuation Breakout