AUD/NZD – Price action on the AUD/NZD daily chart, as shown, has just hit a key uptrend support line (represented on the chart by the green line). This uptrend has formed within the context of a larger, longer-term downtrend (outlined on the chart by the two red downtrend lines). From purely a technical perspective, we might eventually be expecting a breakdown of this uptrend support line in order to continue the momentum of the longer-term downtrend. But now may be a bit early for this. At the current juncture, technical signs appear to be pointing towards a possible impending move back up, heading in the direction of the top of the downtrend channel. The accurate bounce up off the uptrend line that occurred late last week is one of these signs. Another can be found in oscillators like the displayed Stochastics, which are deep in oversold territory and pointing up. In the event of this move back up, the next major resistance to the upside resides around the 1.1745 region, which is the level of the last swing high and a key 61.8% Fibonacci retracement level (the high-to-low retracement span being measured from the last down-channel high on 10/31/2007 to the bottom of that bearish run on 12/14/2007).
James Chen
Chief Technical Analyst, FX Solutions
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AUD/NZD
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