Since my last report on the AUDNZD there has been some interesting action take place. Let's look at the daily chart to see exactly what is going on.
AUDNZD: Daily Chart
Firstly, we can see that the previous resistance level around 1.091 was taken out recently. While I underestimated the short term bullishness of the chart, it is indeed a good sign for the bulls, and there is now added confidence in looking to buy into a pullback. A second break of the previous swing high has resulted so we now have an established pattern of higher highs and higher lows - a bull trend on the daily chart.
I have drawn a trend line from the top of the first break to the top of the second break which sets up a clearly established uptrend channel. After encountering resistance at the top of the uptrend channel, price now appears headed back to down for a test of the bottom of the uptrend channel.
There is a very interesting possibility which may set up in the near future. That is if this current downmove meets the bottom of the uptrend channel at point 3. I have circled and highlighted this area in green. This point 3 sits at the intersection of the uptrend channel support and the first support line which stems from the May low of 1.0647. If price were to pull up here then not only would we have another higher low, the low could be considered as setting up a double bottom with the trend. This would be very bullish indeed. This looms as an excellent setup to enter into long positions.
What if price busts through the first support level? Well, I would get a touch of the heebie jeebies but all would not be lost. There is still the second support level which is at the price level of the point 2 low at 1.0537. Busting that level would most likely spell doom for the uptrend, at least for its longevity.
Now if point 3 does become the next higher low then that may be the launch pad for price to rocket out of the uptrend channel confirming a serious move up is at hand. Or some more toing and froing may take place before a fourth higher low is set and then one could surely expect blast off.
For now, patience is the key. As they say, all good things come to those who wait.
