AUDNZD Analysis The AUD/NZD currency pair has recently seen an impressive rally, finding solid support at 1.0650 on April 22 before moving higher again. This level was the turning point that stopped the long-term decline and started a recovery trend that has seen the exchange rate rise by about 100 pips. While these reverse taxes have provided some relief to large investors, the overall picture is far from optimistic. The AUD/NZD currency pair is trading below a strong descending trend line that has led the price action since the peak on February 19. This ongoing downtrend suggests that the weak market is not ready to give up yet, despite the recent upward momentum. From a technical perspective, the short-term outlook supports cautious optimism. The intraday Relative Strength Index (RSI), which had been hovering around the overweight zone near its 30 mark, has resumed its uptrend and is currently moving towards the neutral level of 50. These changes indicate that the weak pressure is easing and the strong momentum is strengthening. The Moving Average Convergence Divergence (MACD) indicator is still in negative territory but has broken its signal line. This is a typical early signal of a possible trend reversal. The positive divergence between the RSI and the price trend gives this case additional weight. This phenomenon is often accompanied by an impending recovery or at least a short-term pause in the main trend. However, the overall downward trend has not been broken. Although the price has shown strong momentum in the short term, it has not yet managed to reach the resistance level formed at the February high. This technical barrier and the main resistance just below at 1.0800 act as potential re-entry points for weaker investors. If the uptrend fails to break through this key resistance level, the risk of a reversal to the downside will increase significantly. In this situation, investors should keep a close eye on a possible return to the 1.0700 area. A stronger decline could lead to a retest of the April 22 low at 1.0650. A clear break below this major support level could form a new low and strengthen the existing weak structure, paving the way for further declines. The next downside target is likely to be found near the lows of February 22 and 23, which are clustered around the 1.0570 area. This level has been an important demand area in the past and could again serve as a potential buffer against further declines. However, if the bearish momentum intensifies, a break of this level could lead to larger losses, and the currency pair could fall to levels not seen in months. For the technical outlook to finally change to the upside, AUD/NZD would need to not only break resistance at 1.0800, but also break the more significant base level at 1.0900. A move of this magnitude would now mark a clear break in the downtrend and could undo the bearish structure that has been in place since February. Such a break could encourage those who were weak on the mineral tax bill to re-enter the market, adding to the bullish sentiment and laying the foundation for a sustained uptrend. If the bulls take control and break 1.0900, the next major resistance would be the April 1 high at 1.1030. This level is the last key point before the recent decline began and could act as both a psychological and technical barrier. A break here could make the psychological turn more certain, with 1.1100 likely to be the next target. This is the level that could attract buyer interest if the scenario is favorable. To summarize, the AUD/NZD currency pair has entered a recovery phase after a significant sell-off, with technical indicators pointing to a stabilization of the trend. However, the overall weak trend remains, and the recovery trend is within a long downtrend. While the recent dynamics give hope for a more sustainable upside, key resistance levels are just above and could pose serious problems for investors in the uptrend. The risk of a weak re-entry remains high, unless there is a convincing breakout above 1.0900.
