The Amazing Rally

270 pips up today. Yes, it is an amazing rally for the AUD/NZD pair.

Of course strong and interesting fundamentals are staying behind the scene. And turned that it’s not a scene, it’s a macro news race.  

The day started with better-than-expected figures on employment data in Australia and next on the agenda came China’s GDP, showing slowdown in the third quarter. Having in mind that China is the Australia’s largest trading partner, both news had well supported the Australian dollar. As I already mentioned in my previous post, today it became clear that in New Zealand the First Party will be coalited with Labor and Greens to form a government and this announcement was not well accepted by the markets because the risk of taking measures for correcting the New Zealand dollar overvaluation by the new government is increasing. This is about to change the interest rate differential between New Zealand and Australia in next months and would appreciate even higher the exchange rate of AUD/NZD.From a technical viewpoint, the AUD/NZD is showing strong bullish signs, because first of all since April 2015 we are witnessing higher lows. Meanwhile on the four hour time frame the price is well above all its moving averages. The 20-day SMA turned to bullish and crossed to above the flat 200-day SMA with also having 100-day SMA uptrending. RSI and stochastic are located within extreme overbought conditions and are starting to ease over there. Today a new 2017 high was marked at 1.1224 and currently the pair slightly retreated to 1.1207. According to indicators, that might show some exhaustion, in the short term we may expect a pullback. Until then I remain bullish on this pair unless we see formation of a clear reversal pattern at the upper levels.

AUD/NZD meets resistance at 23.6% Fibo

The hawkish RBNZ stance strengthened the New Zealand dollar along with the good economic figures and on this basis the AUD/NZD is seen in downtrend since the middle of March. 

Last week the pair fell to 1.0385, a level that has not been visited since early February.

On the four-hour time frame the 200-day SMA is showing strong bearishness, while the 20-day SMA has turned to north. RSI is located around its mid-line, but has lost directional strength. Stochastic is displaying bearish signs but however now is navigating slightly below its mid-lines.

Strong resistance is seen at 23.6% Fibonacci retracement of latest March to June slope to downwards, currently located at 1.0525. In case of breaking it to above, the pair might visit higher levels.

Looking to downwards, key support is the 1.0375 area (last week’s lows). In case bears are tempted to test it, the pair most like will drop to parity.

AUD/NZD at resistance

Australia’s Q4 data release surprised with better than expected numbers and set the Aussie in elevated mood. Of course this is not relevant against the US dollar, as latest Trump performance pushed the greenback and stocks higher. But meanwhile the AUD/NZD rallied today and succeeded to escape from the recent range. Fundamentally speaking, NZD is influenced now by the RBNZ decision to keep OCR unchanged until September, which reflected on pair’s move up. 

Today the pair sharply rallied and reached 1.0770 – a key resistance level. On the daily chart is the 50-day SMA is crossing to above the 200-day SMA and is giving bullish sentiment. RSI is slightly above the mid-lines and is showing bullish momentum, while stochastic is still placed below its mid-lines, but has turned to north. Closing above 1.0745 will tempt bulls to re-test the key resistance at 1.0770 and will open doors for further gains.