Summary

  • The Australian currency is trying to enter the primary uptrend corridor.
  • AUD/USD took strong support at USD 0.7128 level on a quarterly chart.
  • NZD/USD targets of USD 0.655 already achieved last month post the corrective Rising Wedge Pattern.
  • Volume support along with price action reflecting on bullish sentiments in NZD.
  • Lower COVID cases in New Zealand and lesser restrictions by government support the NZD.

AUD/USD: Entering Primary Uptrend Corridor

AUD/USD broke out of the downward sloping trendline in the last quarter and is now taking support at USD 0.7128 level. The ability of the currency to sustain the present breakout would decide the future direction ahead.

If the currency sustains the current trendline breakout, it could take move northwards to test the resistance of 50-period SMA at USD 0.8321 and USD 0.88 levels in the long run.

On the flip side, a break below the immediate support of USD 0.7128 level (offered by the upward sloping trendline), can take the prices down to test the extended downward sloping trendline at USD 0.674.

AUD/USD Quarterly Chart (Source:   Refinitiv Eikon Thomson Reuters)

AUD/USD Quarterly Chart (Source: Refinitiv Eikon Thomson Reuters)

Volume Support: The recent breakout of AUD/USD above the trendline resistance (downward sloping) witnessed volume support with an increase in prices, suggesting bulls are actively buying AUD for brighter prospects.

RSI is hovering below its mean value at 46, reflecting the absence of any directional support.

Key Support and Resistance Levels

AUD/USD major support level is at USD 0.674, a break and price action below the same could seed bearish sentiments.

On the upper side, a break and price action above USD 0.742 level could seed bullish sentiments and support the prices in the long run.

Recent Events Affecting AUD/USD & NZD/USD

Some of the events in recent times affecting the currency price movement are as below:

  • Lower jobless claims data released by the Labor Department.
  • News over the U.S. President Donald Trump diagnosed with COVID-19 virus.
  • The recent U.S. presidential election exit polls and rumours, creating a zig-zag movement in the global market.

S&P/ASX200 VIX Index Reacts Over Uncertainty and Recent Events.

.AXVI Daily Chart (Source: Refinitiv Eikon Thomson Reuters)

.AXVI Daily Chart (Source: Refinitiv Eikon Thomson Reuters)

Australian Volatility Index (.AXVI) is under a consolidation phase broadly between AUD 17.40-25, and is currently trading at AUD 21.55

Recent uncertain situations in the markets weigh the .AXVI index upwards. VIX on charts gave a breakout signal, and a successful two closes above AUD 22 could lead the prices up to AUD 25, which is the long-term resistance level.

NZD Bullish on Technical Chart: Triangle Pattern breakout

The New Zealand dollar recovered strongly post COVID period during the last two quarters, recovering from the level of USD 0.5470 (low in March) to the recent high of USD 0.6798 (high in September)

In the recent past, NZD/USD demonstrated a triangle breakdown; however, the currency failed to sustain the same with prices not conforming the breakdown, that is, failed to give two consecutive close below the upward sloping trendline of the triangle, leading to a rebound.

However, NZD/USD broke the upper barrier of the triangle pattern in the last quarter but faced resistance from the 21-period Simple Moving Average (or SMA) and retracted slightly.

NZD/USD Quarterly   Chart (Source: Refinitiv Eikon Thomson Reuters)

NZD/USD Quarterly Chart (Source: Refinitiv Eikon Thomson Reuters)

As per the chart reading, prices can make a comeback if the bulls manage to break USD 0.6584 level from downside and can retest USD 0.6584 from where buying can be witnessed on quarterly charts.

Support and Resistances

At present, NZD is taking immediate support at USD 0.6584, and a break and price action below the same could exert bearish pressure to take the currency down to USD 0.6437 level, that is, to the level suggested by the extended downward sloping trendline.

On the upper side, two consecutive closes above USD 0.6820 could seed bullish sentiments and uplift the currency to test the 50-period SMA at USD 0.7234.

New Zealand finds itself in a comfortable position as far as COVID-19 cases are concerned and the government also removed many restrictions from various parts of the country, indicating strong cues for the domestic currency.

Surging Volume: Sign of Good Upward Momentum

NZD price increase was accompanied with volume increase on the Quarterly charts, which indicates that the prices might move up higher in the coming months.

RSI 14 indicator is trading at 46, which suggest indecision in the market.

NZD on Monthly Chart

NZD/USD Monthly Chart (Source: Refinitiv Eikon Thomson Reuters)

NZD/USD Monthly Chart (Source: Refinitiv Eikon Thomson Reuters)

In the previous month, prices broke the rising wedge pattern and took corrections down to the support levels at USD 0.65. However, with the completion of the target level of the rising wedge breakout pattern, prices are now likely to head towards USD 0.703 level to test the resistance offered by the top line of the rising wedge in a coming couple of months.

Conclusion: Chart patterns indicate that the prices could move northwards, considering the current market trend. However, small corrections up to support levels cannot be ruled out from where spur buying might initiate.

Support levels: Medium term (2-4 weeks): USD 0.6584 and USD 0.6437.

Resistances: Medium term (2-4 week): USD 0.703 and USD 0.7234.

 

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