Mon 4th Aug
The AUD/NZD has looked for some time like it is trying to carve out a bottom here. The monthly chart shows that the lows reached back in early 2014 were pretty much on par with the lows from back in 2005:
I have been watching this pair as it has struggled to bounce up from these lows. I have variously mapped these efforts out as appearing like a ‘Double Bottom’ and, more recently in my w/e write up, as a wonky ‘Triple Bottom’ with a neck line equivalent to the daily 200 EMA.
Some forum chatter this morning got me re-thinking this pair though. I now see the AUD/NZD as trading in more of a bullish ascending triangle pattern with a top horizontal resistance level of 1.105.
It is all a matter of perspective though as some are seeing the AUD/NZD as trading in a trading channel and, thus, setting up on the monthly chart as huge ‘Bear Flag’ pattern. If so, this would suggest a bearish move for the AUD/NZD of over 3,200 pips. This calculation is derived from measuring the height of the ‘flag pole’ of the ‘Bear Flag’ pattern:
Any such ‘Bear Flag’ follow-through move would suggest the AUD/NZD would trade down to near 0.77! Deep intake of breathe here!
Perhaps it is the Aussie in me though, and the denial that I could ever see the AUD even slip below parity with the NZD, but I’m favouring the bullish ascending triangle option. I will, however, be keeping an open mind and will look to trend line breaks to help guide me here. My AUD/NZD charts are posted below:
AUD/NZD monthly: Bullish ascending triangle or Bear Flag? Trend line breaks will help guide here:
AUD/NZD weekly: the trading channel is obvious here but so too is the ascending triangle:
AUD/NZD daily: watch for trend line breaks. The 1.105 level is clearly seen here as recent resistance for this pair to contend with:
AUD/NZD 4hr: the trading channel trend line and the 1.105 are merging here as time moves on anyway:
Summary: The AUD/NZD looks to be trading within a bullish ascending triangle pattern with an upper resistance level of 1.105. Some are seeing a possible ‘Bear Flag’ pattern but the 1.105 is near the upper trend line of this potential ‘Bear Flag’ anyway. As always, watch for trend line breaks for guidance.
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