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Australian Dollar Outlook Bearish as AUD/NZD Hints at Topping

Australian Dollar Outlook Bearish as AUD/NZD Hints at Topping

Dimitri Zabelin, Analyst

Australian Dollar Price Chart, AUD/NZD, New Zealand Dollar – TALKING POINTS

  • AUD/NZD plummeted after Australian jobs data led to aggressive Aussie selloff
  • Downside breakout from congestive area opens door to testing support at 1.0607
  • AUD/NZD failure to again break above 2015 resistance may discourage traders

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AUD/NZD plunged over 1.20 percent on Thursday, marking the biggest one-day decline since September 2017. The catalyst behind the monumental price move was the publication of dismal Australian jobs data, which prompted an aggressive selloff in AUD. Along the way down, AUD/NZD closed below the lower lip of the 1.0665-1.0815 digestive zone and below an uptrend, opening the door for more downside potential.

AUD/NZD – Daily Chart

Chart showing AUD/NZD

AUD/NZD chart created using TradingView

The pair briefly flirted with support at 1.0607, though traders may be reluctant to go short until a clear directional bias has been confirmed. If the pair breaks below 1.0607 with follow-through, it could catalyze an aggressive selloff until the pair hits the upper bound of the 1.0521-0.0542 range.

Zooming out to a weekly chart shows the pair has continued to fail to break above August 2015 descending resistance, and the most recent price action made a retest anytime soon appear less likely – at least for now. Negative RSI divergence also highlighted fading upside momentum close to where the pair was testing the lower bound of the multi-layered ceiling. Looking forward, an aggressive decline may ensue in the week ahead.

AUD/NZD – Weekly Chart

Chart showing AUD/NZD

AUD/NZD chart created using TradingView

AUSTRALIAN DOLLAR TRADING RESOURCES

--- Written by Dimitri Zabelin, Jr Currency Analyst for DailyFX.com

To contact Dimitri, use the comments section below or @ZabelinDimitrion Twitter

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

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