AUD/NZD is on the verge of a downside breakout below the recent phase of accumitlaiton. However, there is a caveat to such a forecast —The daily M-formation. The following is a top-down analysis between the daily and hourly chart and goes as a reminder that when trading lower time frames, it is always prudent to zoom out to the higher time frames for the bigger picture. Despite the fresh low, lower close and bearish tendency of the trend, the price could be faking out here according to the daily chart's analysis below. The M-formation is a bullish reversion pattern that would be expected to draw in the price for a test of the formation's neckline. In this case, that level is the 8 Oct low at 1.0524. So, instead of looking for an immediate downside extension, the bulls could be accumulating here and on a break of near term resistance, the bulls can target the M-formation's neckline near 1.0520.

BULLISH AND BEARISH CONDITIONS/ POSSIBILITIES :

All things being equal, the AUD/NZD exchange rate could continue to edge lower during the following trading sessions. The potential target for sellers will be near the 1.0350 level. This also indicates that Senkou Span B of the ichimoku cloud in the daily time frame, along side the aforementioned support at 1.0350 would further decide the expected projections on Australian Dollar versus New Zealand Dollar because this can also become a point of bullish reversal of an extension of losses towards 1.0333 i.e 23.6% fibo retracement level on the weekly chart. 

AUDNZD Opening doors to the downside

Oct 19 2021