Ranges: If we track where the AUD/NZD was at the beginning of the year to where it is now, we can say that it was bullish in 2014. More accurately, it has traded in 2 periods of consolidation linked by a bullish push in in July and August. When we look at the daily chart we can see that a range between roughly 1.0530 to 1.0905 in the first half of the year has shifted into a range roughly between 1.0950 and 1.13 in the second half.
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Range Support: As we can see in the daily chart the AUD/NZD is winding down the 11/18 session with a test of its multi-month range support, and we are seeing some buyers, evidenced by the 11/18 daily candle, which is showing a long tail to the downside.
Given some elbow space, the 1.09 level is indeed a key support, as the bottom of a support/resistance pivot zone and where the 200-day SMA resides. Without any major fundamental shifts, we can anticipate a bullish attempt at least in the short-term. If we are conservative on the bullish outlook, we would look for a rally to the middle of the range around 1.11 instead of back to the range highs around 1.13.
Let’s drop down to AUDNZD’s 4H chart to monitor the reaction at its key support.
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The technical conditions in the 4H chart reflect a sideways market. The RSI has oscillated from below 30 to above 70 and back .The 200-, 100-, and 50-period SMAs are relatively sideways and somewhat clustered between the range of price action.
Currently we are still seeing lower highs and lower lows in price and the RSI, but now we know price is at key support and the RSI here was just in the oversold territory. If we start to get a bullish divergence here, or even if price starts to flatten out, we should anticipate a rally towards the 1.11 handle.
The latest 4H bullish candle is an encouraging start to price action that might signal our noted bullish scenario in the upcoming week or so.
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