By: Mike Kulej
After reaching a twenty-year high at 1.3789, the Australian Dollar-New Zealand Dollar pair has settled into a consolidation period. During the last two months, the price has been oscillating in ever-smaller swings, creating a triangle on the daily chart.
The pattern is not a symmetrical triangle but an irregular one. If anything, it resembles an ascending triangle, with the latest low at 1.3189 and the most recent high at 1.3698. At present, the price approaches the triangle’s apex, meaning that it could breakout soon.
Because the preceding major trend was up, probabilities favor a breakout in that direction. The edge, however, is very small and it is much safer to consider the price surging either way, once the triangle gives way. The most important part is that a good size move in the AUD-NZD is likely to come in the near future.
A confirmation from other technical tools will be very helpful in deciding if the breakout is for real. The ADX, for example, should have a visible uptick, suggesting a new trend under development. If confirmed, the next move in the AUD-NZD could easily span 300-400 pips.