Let’s start the AUD/NZD cross overview at the weekly chart. More than once in our analysis, we were returning to the topic of the horizontal support level (around 1.4210) technical significance, which was confirmed with pin bar formation (November 2013 beginning). These two observation shed some light on the current corrective movement. On the one hand – last week supply broke below the support, but the current pullback is based on the pin bar lower limit (approx. 1.4040).
So, if the demand was able to move the price back above 1.4210 we could estimate, that support break was a trap for sellers. In such a situation we should expect a significant correction of several months declines (e.g. in the vicinity of 1.4550). However, if price will not be able to confirm the validity of 1.4210 support by the negation of its defeat, it would be a signal that the current growth impulse is only a short strop in triumphal supply procession.
AUD/NZD daily chart shows the whole structure of current movement. After a defensive candle with a small pin (September 1), demand signaled yesterday its presence with engulfing pattern. Correction is likely.
