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AUD/NZD Testing the 1.0700 Support Level

May 27, 2020 at 8:22 by Dorin Rosu

The Australian dollar versus the New Zealand dollar currency pair sits above the 1.0707 support level. Is there a possibility for the bears to come with a surprise?

Long-term perspective

The rally that started from the 1.0476 low, after the 1.0013 level was confirmed as support, managed to pass two key levels, 1.0292 and 1.0551.

After conquering 1.0551, the bulls decelerated, but even so, they maintained a healthy trend, achieving to pass and depart from 1.0707, and extend until the 1.0830 high. From the high, after confirming the 1.0826 resistance level, the price retraced to the 1.0707 level.

The 1.0707 level, alongside with the ascending trendline that starts from 1.0476, forms a possible double support.

So, the first scenario is the one in which the bulls succeed in confirming the double support area. If this happens, then 1.0830 is the first target, but given the healthy state of the trend, the resistance may turn to support. In this case, 1.0983 is the next bullish target.

On the flip side, if the double support does not hold, then the depreciation could extend until the 1.0630 intermediary level. After that, the 1.0551 mark would be the next bearish objective.

Short-term perspective

The depreciation from the solid 1.0820 level prolonged until the 1.0667 low. From there, the price retraced and confirmed the resistance written by the 1.0741 intermediary level. After that, a new downwards leg was printed, etching the 1.0692 low.

So, as long as the support line that results by uniting the two lows remains valid, the bulls have a chance to pierce the 1.0741 level. Subsequently to the confirmation of 1.0741 as support, the bulls could take the price to 1.0826.

However, if the price passes the trendline, then the situation would turn neutral, as the 1.0681 level may serve as a bullish regrouping area, but the failure to stay above the line may also be considered by the bears an edge.

Of course, if 1.0861 gives way, then the bears could drive the price to the next support area, the intermediate level of 1.0621 — not highlighted on the chart.

Levels to keep an eye on:

D1: 1.0707 1.0826 1.0983 1.0630 1.0551
H4: 1.0741 1.0826 1.0681 1.0621

If you have any questions, comments, or opinions regarding the Technical Analysis, feel free to post them using the commentary form below.

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