AUDNZD (cont.)

As noted in a previous post, weekly closure has not been able to break 1.322 – in fact, it stopped right on that point, to a pip!!

So what it may tell us for a week to come (and a little bit further)?

If we take a look at weekly chart, 1.322 shows as a significant resistance point with two highs from 2010. These highs have been topped in Dec.2010 with a pullback by the end of a month driving to a all time highs at March.2011. I have a dose of doubt that those highs will be reached again, at least not by the end of 2011 but 1.34-1.35 level remains to be tested. Short term, I’m favoring a smaller pullback maybe even to test 1.28 level before jumping higher. The other elements that are pointing to a correction pattern within next 2-3 weeks are:

a)      High reading in Stochastic Oscillator that historically shows reading of ~90 weekly are leading to a sharp corrections of >300 pips. So while pattern remains bullish, there is a high probability for a temporary pullback on this pair.

b)      RSI readings on 1, 4 and 8 hour are showing divergence.

c) While NZD has almost traced-back all gains vs. USD from Oct. 2011, AUD still has some space to cover that may be another indicator to its short-term losses against Kiwi.