Trending Downwards: Both AUD/USD and NZD/USD have been bearish in 2014, at least in the second half of the year. Both commodity currency pairs continued to decline at the start of the new year, but as we started the first full week of the year, both were in bullish corrections. Let’s monitor these corrections and assess where the market might be fading them.
Correction Stalls: Looking at the 4H AUD/USD chart, we can see price bounce up from 0.8040 at the start of the week, and continued to 0.8106 as we wrap up the 1/5 US session. Note that the 0.81-0.8110 area is a support/resistance pivot area, and where the 50-hour SMA resides. This is the first line of defense for the bearish continuation outlook, and we can expect a bearish attempt during the 1/6 session especially if price falls back below 0.8080.
Next Resistance: However, if AUD/USD continues to correct higher, the next key area will be around 0.8130. This is where the 100- and 200-hour SMA is around at the moment, and price would be challenged by a falling speedline. Watch out for the market to fade the current correction around 0.8130-0.8140 if price gets there.
Correction Finds Resistance: When we look at the 1H NZD/USD chart, we should see a market that was in an intra-session bullish correction, but is now ready for another bearish continuation attempt.
After a rebound from 0.7620 to almost 0.7720, NZD/USD respected the 50-hour SMA, and a falling speedline. The 1H RSI held below 60 showing maintenance of the prevailing bearish momentum.
Bearish Continuation? Last and most importantly of all, price action has shown rejection above 0.77 and is now dipping to close the 1/5 global session.
We should be seeing some intra-session bearish attempt at least toward the 0.7645-0.7633, near-term support/resistance pivot area, with risk of pushing to 0.7620 and possibly lower during the next couple of sessions.
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