AUDNZD formed a forex reversal pattern on its 4-hour chart, hinting that the long-term downtrend might soon turn. Price has already broken past the neckline around the 1.0200 major psychological resistance and seems poised for more gains. The chart formation is approximately 150 pips in height, which means that the resulting breakout could be of the same size.
This could take AUDNZD up to the 1.0350 minor psychological resistance, which lines up with an area of interest. However, stochastic is already indicating overbought conditions, which means that price might return its recent wins soon. A pullback to the broken neckline support might be possible also before the pair heads any higher.
Forex Reversal Forecast
The short-term EMA is making an attempt to cross above the longer-term EMA on the 4-hour chart, which is an early signal that a forex reversal is taking hold. If the indicator moves back down though, this might be a sign that the recent upside break was a fakeout or part of a market correction.
The path of least resistance is to the upside, as an RBNZ official recently clarified that they’re not looking to hike interest rates anytime soon. He added that they might even lower borrowing costs if inflationary pressures continue to weaken in the coming months.
Meanwhile, RBA Governor Stevens also noted that they will keep monetary policy accommodative. He pointed out that it is very likely that the Aussie will fall, although market participants seem to have gotten tired of hearing these same remarks from the central bank head.
There are no event risks for this forex reversal trade lined up from both Australia and New Zealand today, suggesting that the ongoing trends could carry on. Bear in mind though that Australia has released a couple of weaker than expected data points earlier this week and that China’s economic performance has been subpar, both of which might weigh on the Aussie’s rallies.
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