NZDAUD dominated by bears dragging the market lower throughout the day
New Zealand Dollar/Australian Dollar (NZDAUD) Technical Analysis Report for Jul 31, 2020 | by Techniquant Editorial Team
NZDAUD ended the month -0.73% lower at 0.9282 after losing 31 pips (-0.33%) today on high volume. The bears were in full control today, moving the market lower throughout the whole session. Closing within the previous day's range, prices failed to decisively move beyond the prior day's trading range.
Daily Candlestick Chart (NZDAUD as at Jul 31, 2020):
Friday's trading range has been 42 pips (0.45%), that's slightly above the last trading month's daily average range of 41 pips. Weekly volatility is also higher, being slightly above the market's average weekly trading range. The longer-term, monthly volatility is currently slightly higher than usual for NZDAUD.
One bearish candlestick pattern matches today's price action, the Black Candle. The last time a Black Candle showed up on Wednesday, NZDAUD actually gained 0.37% on the following trading day.
Prices broke below the key technical support level at 0.9301 (now R1), which is likely to act as resistance going forward. The forex pair ran into sellers again today around 0.9314 for the third trading day in a row after having found sellers at 0.9314 in the previous session and at 0.9309 two days ago.
The trend is clearly bearish, showing an intact downtrend in the short, medium and long-term.
Selling could accelerate should prices move below the close-by swing low at 0.9258 where further sell stops might get activated. With prices trading close to this year's low at 0.9190, downside momentum could speed up should NZD/AUD break out to new lows for the year.
Among the six market conditions that our pattern recognition engine identified today, the statistics for the Support/Resistance based market condition "High close to prior two Highs" stand out. Although it is usually interpreted as bearish, it has actually shown to be bullish for NZD/AUD. Out of 185 times, NZDAUD closed higher 58.38% of the time on the next trading day after the market condition occurred. The optimal exit for swing trading this condition on the long side has been after 10 trading days, showing a win rate of 58.92% with an average market move of 0.17%.