Thu, Dec 09, 2021 @ 06:46 GMT
HomeContributorsFundamental AnalysisAnother Rout Could Be In The Wings For The AUDNZD

Another Rout Could Be In The Wings For The AUDNZD

Key Points:

  • The pair seems to have reached a turning point.
  • Failed to breach a very robust zone of resistance.
  • Stochastics are heavily overbought.

If you’re looking to side step some of the headline risk of the major crosses, the AUDNZD might be worth keeping half an eye on. Specifically, the pair has been quietly climbing over the past few weeks and this has left it in a rather precarious position. Indeed, the losses seen over the prior two sessions could extend rather significantly regardless of how high the AUD tracks against the greenback.

Specifically, as is shown below, the pair has run into that robust zone of resistance around the 1.0753 handle and, once again, has failed to break through. Even on its own, this fact would tend to support the argument that we are going to see another near to medium-term downtrend take hold. However, given a number of other technical signals also reaching a consensus, rather than a brief dip, we could have another downtrend akin to the August-September rout on our hands.

Notably, Wednesday’s candle is looking distinctly like a bearish shooting star which could be a bellwether of extensive losses yet to be realised. In addition to this, we have stochastics deep in overbought territory which is also severely capping upsides and generating selling pressure. What’s more, if we have another session of similar losses, the Parabolic SAR will almost certainly invert which will also be portentous of a fresh downtrend for the AUDNZD.

Whilst a downtrend is looking fairly likely, the endpoint of the decline is somewhat less clear. However, we do have some clues as to where we are likely to encounter some strong support. Currently, the lowest point that the pair is expected to reach in the near to medium-term is around the 1.0415 handle. Primarily, this is because this point represents the intersection of the 78.6% Fibonacci level and the upside constraint of the old bearish channel. Although, we might see some support from the 100 day moving average.

Ultimately, we will just have to wait and see if the Kiwis or the Aussies are going to pull ahead in terms of the economic data as both have been having a bit of a mixed bag as of late. However, as a result of the lack of consensus in this fundamental data, we could see the above technicals play a larger role than is usual in determining the movements of this pair. As a result, monitor the pair closely, especially in the coming session.

Blackwell Global
The report provided by Blackwell Global Investments Limited ("Blackwell Global") is meant for informative reading and should not be relied upon as a substitute for extensive independent research . The information and opinions presented do not take into account any particular individual's investment objectives, financial situation, or needs, and hence does not constitute as an advice or a recommendation with respect to any investment product. All investors should seek advice from certified financial advisors based on their unique situation before making any investment decisions and should tailor the trade size and leverage of their trading to their personal risk appetite.

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