AUDNZD: Long Term Bearish Support Line Reached Coinciding on 1.0700 Today
The medium term chart below shows the Australian Dollar (AUD) versus the New Zealand Dollar (NZD), known as the AUDNZD pair. Today the long term bearish support line (point 2 in dark red on chart) was tested and that level happen to coincide with 1.0700, which around time of publication saw prices dip just below near session lows and trading at 1.0696 as the trading week heads into its final hours.
The AUDNZD pair had found support just under 1.05 on January 24th, and since has returned to test the long term bearish support line - which then had acted as resistance to push prices back down again, as noted in the last post about AUDNZD in this series. A recovery followed and support was found again near 1.05 and with the February high of 1.0943 unable to be surpassed in April, this prompted a pullback within the overall scope of the downtrend guided by the long term bearish support line that was again reached today.
If this line fails to support an orderly descent, or at least bounce the momentum backwards and help for a bullish reversal, it is likely that a breach of this line would accelerate a bearish continuation, with the 1.05 area to become revisited in the near term.
Below are examples of how to trade a bearish continuation or a bullish reversal:
1. BULLISH BUY ENTRY ORDER: Create a “Buy Entry Stop” @ 1.0714 with a Limit to take profit @ 1.0771 and a stop-loss @ 1.0662 Risk/Reward Summary: Limit risk = +57 pips profit / (-52) Stop-loss risk = Gain to Loss ratio = 1.09
2. BEARISH SELL ENTRY ORDER: Create a “Sell Entry Stop” @ 1.0674 with a Limit to take profit @ 1.0579 and a stop-loss @ 1.0722 Risk/Reward Summary: Limit risk = +95 pips profit / (-48) Stop-loss risk = Gain to Loss Ratio = 1.97
Medium term daily candle chart: