AUD/NZD Reached Strong Weekly Support and Bounced off of It

As we should have expected AUD/NZD reached the support at 1.06194, which is the red trendline you can see on the screenshot, for a fifth time for the past seven months and bounced off of it.

That, however, is no guarantee that a move to the upside is about to begin. The market has an unwritten rule that if a pair attempts to break above or below a certain level 2-3 times usually a reversal follows. This is not the case here though – AUD/NZD has tested this support (the trendline) five times now and it’s still trying to break below it.

If we look at the monthly time frame, the logical continuation of this movement is to the downside, not to the upside. In my opinion we should be prepared for a breakout after the next retracement. If that happens, I think the pair will continue falling towards the strong monthly support at 1.02160.