- A lucid trend reversal shown by AUD/NZD has underpinned the kiwi bulls.
- The 200-EMA is acting as a major cushion for the counter.
- The RSI (14) will trigger a downside momentum if drops into the bearish range of 20.00-40.00.
The AUD/NZD pair has dropped below 1.1300 in Tokyo as strength in the downside bias has picked up. The cross is declining from the late New York session after facing severe hurdles around 1.1320. Widened divergence in the Reserve Bank of Australia (RBA)-Reserve Bank of New Zealand (RBNZ) policy is continuously impacting the aussie bulls.
On a four-hour scale, the formation of lower highs and lower lows has confirmed the trend reversal, which will compel the market participants to ‘sell rise’. The aussie bulls have sensed temporary demand from the mighty 200-period Exponential Moving Average (EMA) a few times. The cushion of 200-EMA is critical for the cross and price movement near the same will determine further direction.
A bearish crossover, represented by the 20-and 50-period EMAs at 1.1363 add to the downside filters.
Apart from that, the Relative Strength Index (RSI) (14) has shifted into the 40.00-60.00 range from the bullish range of 60.00-80.00, which indicates that kiwi bulls are not bearish anymore by the time. A breakdown of the momentum oscillator into the bearish range of 20.00-40.00 will trigger the downside momentum.
The kiwi bulls will strengthen if the cross surrenders the 50% Fibo retracement placed at 1.1240, which will drag the asset towards the round-level support at 1.1200, followed by 61.8% Fibo retracement at 1.1180.
Alternatively, a break above 23.6% Fibo retracement around 1.1375 will drive the asset towards September 30 high at 1.1440. A breach of the latter will send the asset toward September 26 high at 1.1462.
AUD/NZD four-hour chart
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