Fibonacci 61.8s all over the place; Could it continue? AUD/NZD

Although AUD and NZD pairs may be slow because of the Chinese Lunar New Year, AUD/NZD is not!


With many Asian countries closed for the Chinese Lunar New Year, both the AUD/USD and NZD/USD have been quiet over the last few days.  However, one pair that has been showing movement has been AUD/NZD.  And it hasn’t just the last few days!  The pair has been obeying the 61.8% Fibonacci retracement levels since August 2020.  Could it continue?

On a daily timeframe, AUD/NZD has been in forming a symmetrical triangle, trading from a high of 1.1044 on August 18th, 2020 down to a down of 1.0418 on December 1st, 2020.     However, within that triangle, price has been respecting the 61.8% Fibonacci retracement levels as price heads towards the apex. Price had been moving higher off the December 1st low, and on January 21st, AUD/NZD traded to the 61.8% Fibonacci retracement level from the previously mentioned timeframe, near 1.0808.The pair briefly spiked through that level on January 21st and 22nd, only to close at the bottom of the those daily candlesticks, creating 2 evening star candlesticks in a row.  These long wicks on the candles indicated that sellers were waiting at the Fibonacci resistance level and a reversal was possible.    

Source: Tradingview, City Index

On a 240-minute timeframe, AUD/NZD pulled back from those January highs and after the dovish RBA on February 2nd, spiked through the 61.8% Fibonacci retracement from the December 1st lows to the January 21st highs, near 1.0582.  (The candlestick formation on a daily timeframe was a morning star, indication a possible reversal.).  The pair has been moving higher since, and the RSI is currently in overbought territory, indicating the possibility for a reversal.

Source: Tradingview, City Index

On a 60-minute timeframe, AUD/NZD has been moving higher of the early February lows and today, price pushed through the 61.8% Fibonacci retracement level from the January 21st highs to the February 3rd lows, near 1.0727.  However, as this is a short 60-minute timeframe, bears may be looking to enter the market over the next few days to push AUD/NZD lower.  Take note of a few indicators that may cause sellers to enter the market: 1) The 161.8% Fibonacci extension from the RBA announcement price on February 2nd to the post RBA move lower on February 3rd is 1.0762, which act as resistance.  2) The 78.6% Fibonacci retracement from the previously mentioned January highs to the February lows is 1.0778, also resistance.  3) The hourly RSI is in overbought condition and may be ready for a pullback.

Source: Tradingview, City Index

If bears do enter at the 161.8% Fibonacci extension of 1.0762, where is a likely target: the 61.8% Fibonacci retracement of the February 3rd lows to today’s highs, which would be near 1.0626.  There is also horizontal support near this area.  Below there, price could pull back all the way to the February 3rd lows near 1.0542. 

Source: Tradingview, City Index

Note that on the daily timeframe, the downward sloping resistance trendline of the symmetrical triangle crosses near 1.0800 while the upward sloping support trendline crosses near 1.0600.

Although AUD and NZD pairs may be slow because of the Chinese Lunar New Year, AUD/NZD is not!  Watch the 61.8% Fibonacci retracement levels for clues as to where price may be headed next!

Learn more about forex trading opportunities.

Build your confidence risk free
Join our live webinars for the latest analysis and trading ideas. Register now

StoneX Financial Ltd (trading as “City Index”) is an execution-only service provider. This material, whether or not it states any opinions, is for general information purposes only and it does not take into account your personal circumstances or objectives. This material has been prepared using the thoughts and opinions of the author and these may change. However, City Index does not plan to provide further updates to any material once published and it is not under any obligation to keep this material up to date. This material is short term in nature and may only relate to facts and circumstances existing at a specific time or day. Nothing in this material is (or should be considered to be) financial, investment, legal, tax or other advice and no reliance should be placed on it.

No opinion given in this material constitutes a recommendation by City Index or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although City Index is not specifically prevented from dealing before providing this material, City Index does not seek to take advantage of the material prior to its dissemination. This material is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.

For further details see our full non-independent research disclaimer and quarterly summary.