Bulls step in and target 61.8% golden ratio

  • AUD/NZD is correcting the recent bearish daily impulse. 
  • Bulls will be on the lookout for resistance to target, namely in the 61.8% ratio. 

AUD/NZD is stalling on the downside as the kiwi gives back some ground following the labour data surprise and dialled up risks of the Reserve Bank of New Zealand hiking interest rates at a faster pace as firstly anticipated. The following illustrates the prospects of an upside corrector price t the next downside leg. 

AUD/NZD daily chart

The price has found demand in what has been a strong sell-off prior to the support on the daily chart. This leaves prospects of a significant correction to target the 61.8% Fibonacci retracement level near 1.10480 in the coming days. 

Additionally, as extra conviction, the price has left a reversion pattern in the form of an M-formation as follows:

An M-formation has a high probability rate of the price reaching the neckline of the pattern and this has a confluence with the golden ratio. Therefore, this would be expected to act as resistance on a restest by the bulls and lead to a downside continuation.