AUDNZD denied the head and shoulders pattern and aims higher

Who is winning the battle among the antipodean currencies? In our opinion, 2018, at least the first few months, should be better for the AUD. Our view is supported by many signals from the technical analysis and in this analysis, we will look a bit further as our outlook is based on the price movements from the AUD/NZD weekly chart.

Since the middle of 2015, the price was locked inside the symmetric triangle pattern (blue lines). The volatility was decreasing over months and finally, in the middle of 2017, the price ended this sideways trend by breaking the upper line of this formation. After the breakout, bears took the control over and managed to create a head and shoulders pattern (green rectangles). That would be a very strong sell signal if not just one tiny detail. The price did not break the neckline (grey) so, the sell signal was not activated. That denial was a buy signal itself because, after that, the price broke the mid-term down trendline which was connecting the top of the head with the top of the right shoulder (purple). Current weekly candlestick already makes the higher high and low, which is a technical confirmation of the bullish sentiment.

Positive outlook on this instrument stays as long as the price is above the grey area. We do not see much chances for a bearish reversal at the moment.

This article is written by Tomasz Wisniewski, a senior analyst at Alpari Research & Analysis