Despite the sharp fall from the highs, AUD/NZD’s structure remains favourable to bulls as they gather above a cluster of support levels.
We can see on the daily chart that, after piercing our 1.1140 target a sharp correction ensued. Whilst a 50% correction (between prior peak and trough) may be deeper than some would like, it can be said that during this rally AUD/NZD has shown an appreciation for Fibonacci levels before springing higher. The daily trend structure remains firmly bullish and whilst a larger bullish channel remains in play, an increase of overall momentum allows us to focus on a tighter channel with a higher trajectory.
Currently finding support above the July pinbar high and 50% Fibonacci level, a small inside day (which is also the smallest range over a seven-bar period) shows prices are compressing above support. Furthermore, if today’s candle is to close convincingly above yesterday’s high a morning star reversal will have formed, further reinforcing current support.
If the trend continues to thrive there’s a potential 250 pips up for grabs towards the October high (1.1290). Although a break beneath 1.0987 would be a shame for the near-term bias, it wouldn’t be detrimental to the outlook as long the daily chart retains its bullish structure.