Technical Analysis – AUDNZD set to confirm a bullish inverse head and shoulder pattern
AUDNZD is again desperately looking to break above the 1.0870 resistance area that has been holding for more than a year now. Slightly higher, the 23.6% Fibonacci retracement level of the 2011-2020 downtrend at 1.0883 is adding extra importance to the region as it looks to be the neckline of a bullish inverse head and shoulder pattern.
Should the bulls breach that neckline, the rally may accelerate towards the 1.0970-1.1015 zone which has been a key barrier to upside movements during the 2017-2018 period. Note that the RSI and the Stochastics are entering the overbought area but need to find a turning point to confirm that the bullish action is overdone.
Alternatively, if sellers take control, the 1.0797 barrier may provide nearby support ahead of the 20-day simple moving average (SMA) currently at 1.0736. Beneath that obstacle, the price may need to pierce the 1.0660 level to revisit its previous low of 1.0564 and the 200-day SMA at 1.0526.
In brief, AUDNZD is testing a crucial long-term ceiling around 1.0870 which is not for below the neckline of a bullish inverse head and shoulder pattern. A decisive close above that wall could generate steeper increases, changing the neutral profile in the bigger picture to a positive one.
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