AUD/NZD is now trading at its lowest rate for over a decade. The all time high was 1.3794 in March 2011. 270 degrees below that price we have support at 1.0495. The market bounced off that level on 24 January 2014 penetrating it by just 5 pips. It has since retraced and stayed below it for most of the month of March.
Another key support level is 1.0428, the low of 2006. This support was broken for the first time in 8 years on 6 January of this year and the market has traded near this level since.
Swing tops are getting lower and so are swing bottoms. The upper and lower trend lines form a wedge that should converge by mid-April. In the mean time, the market closed Friday at the lower trend line and seems poised to rally.
The upper trend line is on a collision course with the support level around 26 March. That is 4 trading days from the swing low. The last two rallies have only lasted 5 trading days, and the wedge is getting very thin.
Will the market break out of the wedge on the upside or the downside? Anything can happen, however the daily trend is still down as defined by lower swing tops and bottoms, and the market is at historic lows which means there is no support offered by old tops or bottoms. For this reason I anticipate a breakout to the downside.