Technical Bias: Bearish
- Australian dollar continued to weaken especially against the US dollar and the Kiwi dollar.
- AUDNZD looks set to test buyers around the 1.0400 support area.
- Aussie sellers were seen aggressive recently, which ignited a downside reaction in AUDNZD.
Every time the Aussie dollar managed to climb higher sellers got hold of the situation to stall the upside. There is a bearish trend line formed on the 4 hour chart of the AUDNZD pair, which acted as a barrier for the Aussie dollar buyers on several occasions. Currently, the AUDNZD pair is trading around the 1.0420, which is a critical support area. A break below the same might open the doors for a test of 1.0400 support area.
There is a chance of a move higher from the current or a bit lower levels. In that situation, the pair might find resistance around the highlighted bearish trend line. Moreover, the 23.6% Fibonacci retracement level of the last drop from the 1.0645 high to 1.0422 low is also around the same trend line. So, in short there is a major hurdle around the 1.0480 level which might ignite another leg lower in the short term. The 4H RSI is around the extreme levels suggesting a bounce moving ahead.
On the downside, a break below 1.0420 could take the AUDNZD pair towards the 1.0400 support area. However, the most important support is around the 1.1380 level. All three simple moving averages (200, 100 and 50) — 4H are aligning itself for a consolidation phase which might be interesting in the medium term.
Let us see how the FX market sentiment shapes up in the coming days for the Aussie dollar and whether it can trade higher or not. In the medium term, a correction is likely in both AUDUSD and AUDNZD.
One might consider selling rallies as long as the AUDNZD pair remains below the 1.0480 level.