AUD/NZD Carrying a Bullish Bias in a Flag Pattern

AUD/NZD Carrying a Bullish Bias in a Flag Pattern

The AUD/NZD has been sharply bullish since finding support around 1.0020 in April. After a double bottom, we can see the aggressive rally in the daily chart, which just cracked the previous high on the year. So in just a month, the pair has erased 4 months of decline.

AUD/NZD Daily Chart 5/14
audnzd daily chart 5/14
(click to enlarge)

Price has also broken above the 200-day SMA and the RSI has pushed above 70, all signs of a new bullish market. However, even though the pair made a new high on the year, it has not¬†clearly¬†liberated it self from that 1.0795 resistance. We can see price stalling now just under 1.09. It looks like if price retreats back below 1.07 ,we might see a bearish correction to the month long rally. Let’s zoom into intra-session price action to stalk the current consolidation.

AUD/NZD 1H chart 5/14
audnzd 1h chart 5/14
(click to enlarge)

When we check out the 1H chart, we can see that there is still bullish bias even in the near-term. now, price is consolidating under 1.09 and mostly under 1.0850. It looks like a possible flag pattern. But even within this consolidation, price is still holding above the 100-hour SMA and the 1H RSI is above 40. The false break down that tagged 1.07 could be a sign that bulls are still in charge. If AUD/NZD reclaims ground above 1.08, it will likely continue the current bullish trend and put pressure on the 1.09 area. A break above 1.08 would also liberate AUD/NZD from the previous high on the year.

Now, let’s say there is another bearish swing instead of a break above 1.08. The overall trend in the short to medium-term would still remain bullish if price can hold above 1.0650, a previous resistance pivot. However, a break below 1.0650 might shelve the bullish outlook and keep AUD/NZD in a sideways market, with some downside risk in the short-term.

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Fan Yang has been a professional forex trader and analyst since 2007. He specializes in technical analysis and has a Chartered Market Technician designation since 2011. He was the chief technical strategist at CMSFX He was also the founder and chief currency strategist at FXTimes Over the years, Fan has not only been a trader and analyst but also an educator. As a proponent of both technical and fundamental analysis in trading, Fan advocates simplicity and discipline as key factors in making trading decisions when faced with so many "clues" and "signals". Currently Fan Yang is the chief currency analyst and webinar instructor at