The Australian dollar versus the New Zealand dollar currency pair is about to test the major support of 1.0707. Is there any way to grasp the direction?
The rally that began from the low of 1.0476, after the market confirmed the pivotal 1.0013 support, extended all the way to the 1.0830 high.
However, reaching the 1.0830 level involved passing the 1.0707 mark. As a consequence, the bulls could have felt confident that they are in charge of the situation. But the fact that the price turned around from another important area — identified by the level of 1.0826 — after just conquering 1.0707 may be considered as a bearish pressure.
Noteworthy is that the candles of May 15, 18, and 19, define a morning star candlestick pattern.
Both of these arguments may put a lot of stress on the double support etched by the 1.0707 level and the ascending trendline that starts from the 1.0476 low.
So, if the bulls succeed in guarding the aforementioned double support area, then they could be in for another round with the 1.0826 resistance. On the other hand, if the support fails, then the 1.0631 intermediary level gets exposed and, if passed, could lead the way to the key 1.0551 level.
After the strong appreciation from the 1.0621 intermediary level, the price consolidated above 1.0741 — also an intermediary level — before approaching the 1.0820 zone.
But once at 1.0820, the bulls had trouble passing it. After engraining the 1.0828 high, the price plummets to 1.0741 and fails to find support there. As a result, the bears push it beneath, crafting the low of 1.0715.
As long as the price oscillates under the 1.0741 level and validates the descending trendline that starts from 1.0828, the bears could bring the price to 1.0681 and, later on, even to 1.0621. But if both of these lines are pierced and, as a consequence, become double support, then the bulls could have 1.0826 as their aim.
Levels to keep an eye on:
D1: 1.0707 1.0826 1.0631 1.0551
H4: 1.0741 1.0681 1.0621 1.0826
If you have any questions, comments, or opinions regarding the Technical Analysis, feel free to post them using the commentary form below.