By: Mike Kulej
Not that long ago, in late December 2010, the Australian Dollar – New Zealand Dollar was in a strong bullish trend. In fact, the rally was powerful enough to carry this pair to 1.3510, which was a high of the decade.
Since then, the AUD-NZD corrected sharply, falling to 1.2775. So far, it has been a correction, not a trend reversal. The price dipped under the uptrend, but reversed almost immediately, faking possible sellers. In addition, the low of 1.2635, the lowest point before the high of 1.3510, has not been tested, preserving the uptrend.
Will the Bullish Trend Remain?
Even though the bullish trend is still in charge, it lost its dominance. The most recent minor price swings on the daily chart, suggest an indecisive market, which oscillates around the 100 SMA and is unable to find direction. The puncture of the trendline was a warning sign.
During the coming next few days we should find out if, the rally will regain momentum. The AUD-NZD is testing a very strong resistance at 1.3200. This level proved to be difficult to break before, and it might create problems again. If price moves above this resistance, the chances for more advances will increase dramatically. Otherwise, the AUD-NZD might be stuck in a trendless phase for a considerable time.