AUD/USD hit 2024 highs on Monday, breaking and closing above downtrend resistance that has repelled bullish advances on multiple occasions this year and last. While the initial bullish break looked promising, the early signs on Tuesday don’t look great with the price reversing back below the level. The uptrend in RSI (14) has also been broken, although price has yet to follow suit and MACD has not confirmed the momentum signal.
Given the mixed picture, we are not prepared to do away with the bullish stance until we see a clean break of the uptrend AUD/USD has been in since September 11. As such, we are still inclined to buy dips looking for a push towards prior market peaks at 0.6871 and 0.6893, especially as a break of that zone may facilitate a test of long-running downtrend resistance dating back to early 2021.
Traders keen to buy dips could use the uptrend or a stop below 0.6830 for protection. If the uptrend were to be broken, the bullish stance would be invalidated, pointing to potential range trade or selling rallies.
NZD/USD is in a similar position to AUD/USD, sitting in an uptrend dating back to mid-August. The only difference is it’s yet to retest downtrend resistance dating back to mid-2023.
One look at the price action above 0.6250 shows there’s plenty of willing sellers at this level, as demonstrated by the long topside wicks. However, with the price managing to close above this level, it suggests bulls may be gaining the upper hand, especially with Monday’s candle printing as a key reversal. With momentum indicators providing bullish signals, upside is preferred over downside in the near-term.
We are prepared to wait for a setup to be given where NZD/USD sits on the charts, waiting for a potential pullback towards the uptrend, allowing for a stop to be placed below it for protection, or waiting for a potential bullish break above 0.6300, the intersection of downtrend and horizontal resistance. If such a move were to stick, you could place a stop below it for protection. Potential upside targets include .6370 and 0.6411.
If uptrend support were to give way, the bullish bias would be negated, allowing for alternate trading strategies.
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