FxWirePro: AUD/NZD minor and major downtrends drift non-directional after test of strong support and bullish EMA crossover - 1m DNT to trade

The major trend of this pair has been downtrend that has gone into consolidation phase approximately from the last three years.

While the short-term trend has formed rising channel, the current prices are attempting to creep up through channel baseline after the slumps from the channel resistance of 1.1289 levels, as a result, the price behavior resembles non-directional mode.

Mild upswings are backed by both leading oscillators, RSI has shown the strength at 43 levels. Historically, from these levels, there has been noticeable spikes. While stochastic curves have constantly shown the upward convergence. While these momentum oscillators on monthly timeframe signal overbought pressures.

After four consecutive days’ of weakness in AUDNZD, the upswings are now evident.

The next stiff resistance is observed exactly at 1.1089 (i.e. 21DMA levels), and the strong support zone at 1.1053 levels.

On the flips side, the major trend has been stuck in the long-lasting range (refer monthly charts), the current prices spike above EMAs but attempt to slide back in this range as it reaches near range resistance.

Bulls in the intermediary trend seem unlikely to break range resistances, expect the range bounded trend to persist as momentum indicators signal losing strength.

Overall, amidst ongoing mild upswings, the resumption of major downtrend at any time cannot be ruled out, even if you any abrupt upswings, that shouldn’t be deemed as panicky sentiment.

Instead, contemplating both short term and long term technicals, we recommended a limited loss but certain yields structure via double-no-touch optionality in next 1-month, AUDNZD 1m DNT with 1.1289/1.0786 strikes – but we are reluctant to sell volatility outright given the unquantifiable risk. However, shorting volatility and fading the spike in skew through limited loss structures (i.e. DNT’s) could be appropriate.

Currency Strength Index: FxWirePro's hourly AUD spot index is flashing at 66 levels (which is bullish), while hourly NZD spot index was at shy above -23 (which is neutral) while articulating (at 06:23 GMT). For more details on the index, please refer below weblink:

http://www.fxwirepro.com/currencyindex.

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