AUDNZD breaks trendline and tests major support
The AUDNZD pair has been selling off sharply over the past two days. This break below a key trendline yesterday brought about more selling and has found support on a major level. That being said, this week’s break brings the pair into a much more dangerous position and makes it look like we could see another major leg lower in the coming weeks.
The weekly chart below shows that during the past 10 months, the pair has been retracing a major move towards the downside that took place from 2011 onwards. Given the upside seen throughout 2014, it has been interesting to see whether this has been a bottom being created or simply a retracement. However, with the break lower this week, it increases the likeliness that we are going to be breaking below 1.049 to create a new multiyear low. Should that happen, we could see a massive deterioration in the value of this pair. However, for the time being there has been clear support found at 1.053 which is worth looking into. On the four hour chart, the pair has clearly suffered since breaking out of the channel, falling back to the historical support level of 1.053. However, the hammer candle this afternoon spells warning signs. Thus it will be interesting to see if the pair break higher for a strong retracement or else just another minor consolidation prior to another break lower. A clear sign of this would be whether the pair breaks above the 1.062 level. If not, then we could see yet another break lower. Should that occur, I am ultimately keen to see if the 1.049 level is broken or not. While we remain below 1.062 resistance level, I would be watching out for a possible move lower. However, a move above 1.062 could bring a bullish short term move towards 1.07 (50% retracement).
About Joshua Mahony
Joshua Mahony is Research Analyst at Alpari UK. Having joined in 2012, Josh’s previous experience in the industry includes time spent on the trading floor at Barclays Capital and working for Deutsche Bank in New York for a year. Originally coming from an economics background, Josh then traded equities in the wake of the 2007/2008 financial crisis. He is now turning that experience towards the forex markets. Josh writes market commentary that has featured on websites and publications including the Financial Times, Reuters, the Guardian, ABC News, CityAM, the Washington Post and the Miami Herald. You can follow Josh’s analysis on Twitter, and Google+