AUDNZD followed a downtrend from a 1½ -year high of 1.1288 reached on October 24 to a one-month low of 1.0986 on November 15. Currently, the pair is consolidating around 1.1120, but if the market fails to post a lower low, then the risk would shift to the upside.
The technical indicators give bullish signals in the short-term. The pair is fluctuating above the Ichimoku cloud as well as the 20 and the 50-period simple moving average lines which recorded a bullish cross yesterday. However, upside movements might be restricted in the near term as the SMA lines are trending flat, while the RSI is positively sloping above its neutral zone, but has reached overbought levels in the 1-hour chart. The MACD is marginally above zero and its signal line.
An extension to the upside would first meet the previous top at 1.1138. Any violation of this point, would target the 1.1200 key-level and then the October’s top at 1.1288.
Alternatively, If the pair heads down, the 20-period SMA at 1.1064 could be a strong support, as this level has been repeatedly tested the past two weeks and is also the lower bound of the Ichimoku cloud. From here, the scope opens towards the previous low at 1.0986, which if breached would stretch the longer-term downleg. Steeper declines would also shift focus to 1.0876.
