The AUD/NZD pair had a positive session on Tuesday, breaking above the 1.0650 level. That’s a very bullish sign, and a market that has broken down significantly. With that being said, a countertrend move could be forming as we speak. If we can break the top of the range, I believe that we will rise in value and head towards the bottom of the trend line that was broken back in December. After all, you have to look at this in three different markets. The first one of course is the AUD/NZD pair, but you also have to focus on what’s going on in the AUD/USD pair, as well as the NZD/USD pair. It’s a simple matter of triangulation, and when you look at those other markets the AUD/USD does look a little bit week, but it is sitting above massive support in the form of the 0.80 handle. On the other hand, you have the NZD/USD pair which while it is sitting above support, it is a major support. Is just simple consolidation thereby making the New Zealand dollar more likely to fall overall.
Countertrend move, but could be good for a couple of handles.
Although this is a countertrend move, and I typically don’t like them, if we can break out above the top of the range during the session on Tuesday, I believe that there is nothing but “air” above the top of that range and as a result I feel that we could have a fairly quick move. Don’t get me wrong, it’s not that I like the Australian dollar in general, it’s just that I like the New Zealand dollar even less and that’s all that matters. After all, it is a measurement of relative strength, and that of course means that you only have to be following what is “less bad.” With that being said, I don’t really have any interest in selling yet, but if we formed a resistant candle right at this area, it could show a simple continuation of the downward trend. At this point in time though, that’s not what I expect.
