AUD/NZD 4H Chart: Descending wedge

Source: Dukascopy Bank SA
© Dukascopy Bank SA
AUD/NZD took a dip to show 1.0438, breaking the support level at 1.0439 which had not been touched since Jul 13, meanwhile continuing to move inside the bounds of a descending wedge pattern. The pair appears to be targeting the bottom trend-line once again and we expect it to fail at 1.0397, encountering intermediate support provided by the bottom Bollinger Band and weekly S1at 1.0423 on the way. A bounce from the lower trend-line is likely to result in a reversal; if the upper trend-line at 1.0453 is broken, it will be tested once again before the market finds initial resistance at 1.0475 where the 20-period SMA lies, followed by a rally towards 1.0494 or 1.0521. The 100-period SMA downward crossover with the 200-period SMA however, does not allow us to reject the possibility of a continuation, amplified with an overwhelming 71% of traders being long on the currency. The pair has also developed a channel pattern, implying that the downward trend might indeed continue and in case the bottom trend-line of the wedge breaks, the price will slide to 1.0333 where the July 8 low lies. Aggregate daily technical indicators, however, show prospects of a bullish pattern.
© Dukascopy Bank SA
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