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Bears Back on AUD/NZD from 1.0880?

June 10, 2020 at 4:49 by Dorin Rosu

The Australian dollar versus the New Zealand dollar currency pair retraced from 1.0826 in a very noticeable manner. Are the bulls preparing an important movement, or are the bears the ones doing that?

Long-term perspective

The upwards pointing tendency that started after the 1.0013 level got confirmed as support extended all the way to the 1.0880 high.

The latter part of this development took the form of an ascending trend, which is supported by the trendline starting from the low of 1.0476.

However, the beginning of June brought about the invalidation of the ascending trendline and also the piercing of the major 1.0707 level.

This unfolding, which looks very good from the bearish perspective, can be counterbalanced by the fact that the market printed a hammer candlestick pattern on June 9, as this pattern usually indicates that the bulls are about to heavily join the market.

But the fact that the hammer materialized under the relevant 1.0707 level, and also printed a lower low, makes the situation less attractive for the buyers.

So, if the bulls do manage to bring the price back above 1.0707 and close a candle above it, then they might have a chance to make things right. In the first step, they should be able to drive the price to their prime target, 1.0826. For the second one, they should accomplish carrying on with the rally so that the price gets above the 1.0826 level and confirms it as support, which would allow for further extensions towards 1.0983.

Although this could happen, if the bullish movement halts at 1.0826, then a head and shoulders chart pattern may be in place, which would shift the target to 1.0551.

Short-term perspective

The descending movement that started at 1.0880 extended until the 1.0681 intermediary level. Here, the price advanced under the level only to retrace in a relatively short time, continuing to oscillate around the 1.0681 level.

But as what followed was not a strong rally, which could have been fueled by the rejection, and instead allowed a consolidation, points out to the fact that this is not a situation in which the bulls are taking over, but one in which they are defending.

So, if the 1.0694 high is taken out, then the bulls could head for 1.0741 and 1.0778 later on. On the other hand, if 1.0681 gets confirmed as resistance, then the bears would target the 1.0621 intermediary level.

Levels to keep an eye on:


D1: 1.0707 1.0826 1.0983 1.0551
H4: 1.0681 1.0741 1.0778 1.0621 and the peak of 1.0694

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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