The decline that started around 1.0700 on the Australian dollar versus the New Zealand dollar currency pair looks like it is making the first step towards confirming a weekly major support area.
After the rally that started at 1.0300 and pierced the resistance of the descending trend managed to continue without looking back until it touched the 1.0666 second weekly major support, the price corrected in the form of a retracement to the first weekly major support at 1.0546.
Such a strong appreciation that crosses three major lines — the resistance of the descending trend and the two major weekly levels — needs to correct and confirm the new direction, otherwise it could be considered a bubble and attract a massive sell that will invalidate the entire move and the bullish direction itself. So, such a correction needs to confirm as a support one of the three aforementioned areas.
The current development hints that 1.0546 could be the level that will help the bulls, but, for this to actually happen, the price must remain above 1.0546 or falsely break it. This could also lead to a possible range or a symmetrical triangle limited by 1.0546 and 1.0666, both continuation patterns that in the current context will fuel the resume of the appreciation.
Only a piercing and confirmation as resistance of 1.0546 could change the view and cause a fall towards 1.0452.
The upwards move that began at 1.0398 ended at 1.0731, giving way to the piercing of the support trendline. But the depreciation was halted by 1.0542, from where the price printed a strong bullish candle.
For a while, price could consolidate between 1.0542 and 1.0625 with the expectancy of a piercing of 1.0625 and its confirmation as a support.
As long as 1.0542 serves as support new extensions towards 1.0672 and 1.0731 are possible.
Levels to keep an eye on:
D1: 1.0546 1.0666 1.0452
H4: 1.0542 1.0625 1.0672 1.0731 1.0487
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