AUD/NZD Finds Support — For Now
Matt Simpson | Jul 11, 2014 03:43AM ET
Looking ahead I do suspect that both fundamentally and technically we will see the divergence between the two economies currencies widen, making AUD/NZD shorts the way to go.
The downside break from the original (inner) bearish flag / bullish channel was not as clean a break as I'd have liked. In fact the channel itself is up for debate as we can see that soon after breaking out, the pair reversed back inside the pattern to effectively invalidate it. That said, price has since moved lower towards the 1.062 support zone and bearish momentum has slowed since arriving at this key level.
There are several levels of support which are so far being respected: Lower channel from Jan '13 low; Monthly S1; Horizontal support.
Following yesterday's volatile Doji (long legged Doji) and respect of this support zone does highlight the potential for a retracement. However due to the long-term downtrend and bearish continuation patterns I do suspect we'll see a further downside break soon enough. This may be a pair to monitor for next week, but any break below 1.060-62 should open up the Jan lows around 1.0495 - 1.05
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