AUD/NZD is extending a bullish breakout that occurred last week. The 4H chart shows that price fell from 1.1295 (current high on the year) down to 1.0919 in September. Then, last week, price rallied sharply, especially toward the end of the week, when it broke above a falling trendline, and above the 200-, 100-, and 50-period simple moving averages (SMAs). The 4H RSI also shot up above 75 to show the start of bullish momentum. If after a pullback, the 4H RSI holds above 40, the bullish momentum would still be in play.
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After flirting with the 200- and 100-period SMA in the 4H chart, price rallied above 1.11 and above the SMAs coming close to the 1.1295 high by the 9/29 European session. Price has since consolidated, and we can anticipate some bearish attempt due to overbought condition shown by the RSI reading which is around 75 at the moment.
If we do get a bearish pullback, a bullish AUD/NZD should keep price above 1.11. If price falls back below 1.1050, the current high might be stronger than it looks now, and we would have to say that AUD/NZD is in a consolidation, sideways market.
For some more perspective, let’s turn to the daily chart. We can see the market was sideways to start the year, though there was a slight bullish tilt. Still, it was after July, when price rally took off.
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Note that after the September decline, price bounced up from the moving averages. This is a bullish slingshot signal. The RSI did crack 40 to show some loss of bullish momentum, but for the most part, it shows maintenance of the bullish momentum now that the reading is heading toward 70. Above 1.13, there is a support/resistance pivot area in 1.14-1.1435. Above that, the next key resistance would be at the 1.1576 Oct. 2013 high.
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