The Australian dollar versus the New Zealand dollar currency pair, slowly but steady, depreciated despite all odds. But for how long is this going to last?
From the high of 1.0865, which was a false break of 1.0837, the price began a very convinced depreciation. Even if multiple levels could have served as support (noteworthy being the weekly support of 1.0689 and the monthly support of 1.0530, respectively), the bears managed to pierce them.
This leads to the current situation, in which the price is very close to what might be the bullish last standing, 1.0361, respectively.
As a result, two outcomes are possible. In the first one, the bulls get back in business. This may materialize as a quick retracement from the 1.0361 area or as a false piercing of it. Any bullish reversal pattern might simply fail because of the strong bearish pressure. To make up for this, the bulls must come back in a big way — in one in which they show their mightiness. That is why a strong bullish price action from this area is the solution, and the materialization of one will look either as a false piercing or as a strong retracement, both targeting 1.0530.
However, the bears might simply continue their current endeavor, and in such a case the price could very well reach the level of 1.0277. But the bears should be cautious, as the 1.0361 level must first be confirmed as resistance, otherwise, the aforementioned bullish scenario — the false piercing of 1.0361 — might came into being.
The confirmation as resistance of 1.0361 may look as a conservative one or as an aggressive one. In the conservative one, the price pierces the level, then retraces, confirms it as resistance, and heads on for the target. The aggressive one will look like a piercing that is followed by a strong continuation towards the south.
After the strong drop that began at 1.0807, the price made a small pause around 1.0635, and then continued the depreciation.
In the current setup, if the price confirms 1.0404 as resistance, then the next target is 1.0368, followed by 1.0332.
Only if the bulls manage to reconquer 1.0440, then 1.0500 will be a possibility.
Levels to keep an eye on:
D1: 1.0361 1.0530 1.0277
H4: 1.0404 1.0368 1.0332 1.0440 1.0500
If you have any questions, comments, or opinions regarding the Technical Analysis, feel free to post them using the commentary form below.