AUDNZD Analysis July 2016 (Q)
Created on Friday, 01 July 2016 08:40
Written by Austin Galt
The AUDNZD recently made a low at 1.0404 and is currently finding support however price has still not confirmed whether or not it wants to break that support or not. Let’s take a look using the big picture quarterly chart.
AUDNZD QUARTERLY CHART
We can see all the major highs and lows since 1990. This looks to have formed a massive 5 point broadening top with the 1995 low point 1, the 2000 high point 2, the 2005 low point 3, the 2011 high point 4 and the 2015 low point 5. Now it is possible that the point 5 is still to be seen which would mean price heading to new lows from here. However, as long as current support holds, I favour the point 5 low to be in place but. Admittedly, I am starting to think that support will give way imminently.
The PSAR indicator shows price now just above the dots which represent support. These dots currently stands at 1.0343 and will likely be around 1.04 in July so breaking to new lows now would essentially mean support has not held up.
The Bollinger Bands show price finding resistance at the middle band and subsequently sliding down along with it over the past year. It is now decision time. Does price head back to the lower band or make a break higher for the upper band? Previously, I favoured the latter but without any impulsive reversal to the upside I am now starting to favour the former. The market will let us know its intentions shortly.
I have drawn a Fibonacci Fan from the 2000 high to 2005 low. This shows the 2015 low around support from the 61.8% angle while the recent high was at resistance from the 76.4% angle. Does price now break lower to test the 61.8% angle again or does it head back up to the 76.4% and potentially then onto the 88.6% angle? Once again, we will know shortly.
The RSI shows a bullish divergence in place and if price were to break to new lows now then a triple bullish divergence would likely form. That would be a nice buying opportunity were it to happen.
The MACD indicator is bullish although the averages have close together and look to be threatening a bearish crossover.
So, price really does appear to be a critical juncture. I am bullish as long as the outlined support holds although I must admit to having some major doubts. In fact, I am leaning to the bearish scenario. I will let the market lead.