This week, the Aussie has been resilient against the Kiwi .After making a low on the year as well as a historic low at the beginning of the April at 1.0020, AUD/NZD came close to that low this week, but rebounded.as we can see in the 4H chart. Today, price broke above the previous high on the year and consolidation resistance at 1.0222. This essentially completed a double bottom.
Price is crossing above the 200-period SMA and the RSI is pushing above 70. These are signs that the market is initiating a bullish outlook. Now, if there is a pullback, we should expect support around 1.0150. If price falls below 1.0140, AUD/NZD would fall below the 100-, and 50-period SMAs as wel as the middle of the broken range. IF the RSI also falls below 40, these would be signs of a failed bullish breakout, which would translate into a strong bearish signal, especially since the prevailing trend is bearish.
The daily chart shows that the current double bottom is going to be challenged by a falling trendline. As price approaches 1.03, it will be tested by the trendline and the 50-day SMA. The prevailing trend is still bearish, so expect selling here. Then, as we discussed, see what happens around 1.0140-50 area. IF this area holds as support, then we might get another attempt to break these resistance factors.
If price breaks above 1.03 and the daily RSI pushes above 60, we can look for further consolidation, or bullish correction. However, we should not assess the AUD/NZD as bullish until it shows respect to the price bottom and starts holding above 1.02 after subsequent, strong bearish attempts.
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