AUD/NZD Tests Key Resistance – Is This a Bull Trap?

Today we focus on the Australian Dollar (AUD) and New Zealand Dollar (NZD), both of which are struggling amid a bearish market sentiment. Despite the general weakness, the AUD/NZD pair is showing interesting price action. For most of the week, the pair was trading sideways within a blue rectangle, reflecting indecision and consolidation.

However, on Friday, the price broke out to the upside, marked with orange color on the chart, testing a key resistance area marked with yellow color. The price is currently respecting this resistance, and we are witnessing a bounce off this level, suggesting that sellers are defending this area.

This upward breakout could be a manipulation or a false breakout, especially if the price drops significantly and returns to the levels inside the blue rectangle. A false breakout would signal a trap for the buyers, leading to a bearish continuation with a target on the red horizontal support, and possibly even lower.

On the bullish side, if the price closes today above the yellow resistance area, it would validate the breakout and provide a strong buy signal, suggesting a bullish continuation. Conversely, if the price falls back to the rectangle levels, it would confirm the false breakout, serving as a sell signal with a target on the red support.

Source: https://www.axiory.com/analytics/technical-analysis/aud-nzd-tests-key-resistance-is-this-a-bull-trap