Australian Dollar Outlook Bearish on Coronavirus: AUD/NZD, AUD/CHF, GBP/AUD
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Australian Dollar, New Zealand, Swiss Franc, British Pound– TALKING POINTS
- AUD/NZD monthly chart shows downside breakout in Symmetrical Triangle pattern. What next?
- AUD/CHF approaching weakest exchange rate on record as Australian Dollar selloff deepens
- GBP/AUD slope of appreciation steepens as the pair aims to challenge five-year resistance
AUD/NZD PRICE CHART
AUD/NZD has broken below the lower tier of the Symmetrical Triangle formation, a continuation pattern characterized by its consolidative nature following a massive buying bout or severe selling period. The prior downtrend from 2010 through 2015 and subsequent congestive period suggests AUD/NZD was headed towards downside follow-through after it had digested losses.
However, now that the lower channel has been broken, it could catalyze the start of what could be another market-wide selloff of the same magnitude than the prior downtrend. However, as with any major break in key technical levels, confirmation is critical in providing greater assurance that a trend has indeed been decisively invalidated.
AUD/NZD – Monthly chart
AUD/NZD chart created using TradingView. If you are unable to see these images, click here
AUD/CHF is a hair away from testing its weakest exchange rate on record at 0.5654. Not entirely by coincidence, the date that this candle corresponds to is January 2015, the year and month that the Swiss National Bank removed the floor on the EUR/CHF exchange rate and caused the Swiss Franc to surge against its counterparts.
Looking ahead, a break below this level could further amplify selling pressure and cast a bearish overhang, making a recovery in the future more difficult.
AUD/CHF – Monthly chart
AUD/CHF chart created using TradingView. If you are unable to see these images, click here
GBP/AUD’s slope of appreciation steepened from the 2016 uptrend in August 2019 and has since risen over 12 percent as it wrestles with a stalling point not tested since May and June of 2016. If upside momentum remains robust, the pair may aim to challenge resistance at 2.1617, a ceiling GBP/AUD was unable to clear for several months. Pushing through there could reinvigorate bullish sentiment and propel the pair higher.
GBP/AUD – Monthly chart
GBP/AUD chart created using TradingView. If you are unable to see these images, click here
AUSTRALIAN DOLLAR TRADING RESOURCES
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--- Written by Dimitri Zabelin, Jr Currency Analyst for DailyFX.com
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DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.