The AUD/NZD is another pair that has been trading in a well defined descending channel for almost a year. This pair has been trending downwards since at least last July and last week broke this trend by turning strongly bullish and breaking the descending channel at 1.2576 +/- a few pips. After trading as high as 1.2681 last week it again turned bearish to test the top of the channel and has now bounced, with some strength. Since the end of the New York session, the pair has risen 53 pips to completely engulf the last 2 days trading range in 8 hours. The pair will face strong resistance at 1.2700 where a weekly chart makes the support/resistance level almost blatantly clear. This also coincides with last week's high of 1.2681...which if broke, offers the bulls some hope that the level can be overtaken and a continued rally upwards is possible. The next targets will be 1.2783 and then the 50% Fibo from the low in September 2009 to the High in February 2011 waits at 1.2858. Support to the downside remains at 1.2554 and 1.2490, a break of the latter will see the pair fall back into it's descending channel and possibly bring on a bearish rally to 1.2200.
Happy Trading