AUD/USD and NZD/USD: (AN impulse Bullish shift underway) Levels and Targets
AUD/USD: Trend: Price broke down from its broad 2016 triangle in Q4 2016 and challenged the bottom of the nine-month range and our downside target at 0.7150/00 in December. The response to nine-month lows at 0.7150/00 has been positive however, setting up an impulsive bullish reversal pattern in January. ST cracks are starting to emerge with a series of daily and weekly Doji (open = close) produced in the past two weeks.
On a multi week basis the interim uptrend justifies a retest of the base of the broken LT uptrend channel at 0.7720/40. Beyond this we note 2016 highs at 0.7778/0.7835 as a difficult hurdle that would need to be overcome in order to establish a more sustainable MT uptrend.
Outlook Price achieved our downside target at 0.7150/00 in late December before launching an impulsive uptrend in January. Bullish monthly reversal pattern in January confirms that the Q4 decline was most likely a correction and implies a reassertion of the MT/LT uptrend.
Current upswing initially targets a retest of the trend channel base at 0.7720/40. ST factors imply that this upswing may initially pause / correct, ahead of new 2017 highs.
NZD/USD: Trend: Price is in the process a completing its sixth consecutive up week and in doing so has achieved our interim topside target and two major trend lines at 0.7310/30. The intraday break of 0.7310/30 (high 0.7350) was not maintained into a daily close and leaves us without confirmation of a sustainable uptrend. If/when achieved a close above 0.7310/30 will confirm that the multi-year uptrend channel remains a dominant structure.
The top of the uptrend channel around 0.77/0.78 would become an obvious MT target. Note that 2016 highs at 0.7403/0.7486 are an additional resistance level and set up a difficult path above for NZDUSD. Weekly Bollinger band around 0.7370 adds to the upside obstacles
Outlook: The January uptrend has been impulsive, confirmed by a fresh positive MT momentum bias and implies that pressure remains on our interim target and major resistance at 0.7310/30. A weekly close above 0.7310/30 would target a retest of the 2016 highs at 0.7403/0.7486 and ultimately channel resistance around 0.77/0.7