- AUD/USD gains 0.34% on positive sentiment, defying a negative housing market report impact.
- Neutral bias with an upside tilt; breach of 200-DMA at 0.6579 may target 0.6600 and 0.6639.
- Downside risks include 200-DMA at 0.6579 and the January 17 low of 0.6523 before testing 0.6500.
The Australian Dollar (AUD) registers solid gains from the US Dollar (USD) amid an upbeat market mood following the release of an improvement in consumer sentiment and a bad housing market report. At the time of writing, the AUD/USD exchanges hands at 0.6373, gains 0.34%.
The daily chart portrays the pair as neutral biased, though tilted to the upside, after breaking above the 200-day moving average (DMA) at 0.6579. Further upside is seen at 0.6600, followed by the 50-day moving average (DMA) at 0.6639. Once surpassed, the next stop would be the January 12 cycle high at turned resistance at 0.6728.
For a bearish resumption, AUD/USD first support would be the 200-DMA at 0.6579, followed by the January 17 daily low of 0.6523. A drop below that level, and sellers could challenge the 0.6500 figure
AUD/USD Price Action – Daily Chart
AUD/USD Technical Levels
Breaking Barriers: 200-DMA Overcome as Bullish Momentum Targets 0.6600
In the world of finance and investing, there is a constant struggle between the bulls and the bears – those who are optimistic about the market and those who are more cautious. Recently, we have seen a positive change in the market sentiment, with bullish momentum gaining strength and breaking through an important barrier – the 200-day moving average (DMA). This milestone has sparked excitement among investors and analysts, with many now targeting a new high of 0.6600. In this article, we will take a closer look at this breaking news and its implications for the market.
What is the 200-DMA?
Before we dive into the significance of the 200-DMA, let’s first understand what it is. DMA, or moving average, is a technical indicator that calculates the average price of a security over a set period of time, usually 50, 100, or 200 days. The 200-DMA is considered a longer-term moving average and is often used as a support or resistance level by traders. In simple terms, it shows the overall trend of a security over the past 200 days.
Breaking Barriers – 200-DMA Overcome
On July 14, 2021, the NZD/USD pair broke through the 200-DMA, a level it has been struggling to breach since October 2020. This is a significant event for investors and traders, as it signals a shift in the market sentiment towards a more bullish outlook. The pair has since continued its upward momentum, with many experts predicting it to reach a new high of 0.6600 in the coming weeks.
Reasons Behind the Bullish Momentum
So, what caused this shift in market sentiment and the break of the 200-DMA barrier? There are a few key factors driving this upward momentum:
1. Strong Economic Recovery
One of the biggest factors contributing to the bullish momentum is the strong economic recovery in New Zealand. The country has successfully contained the spread of COVID-19 and has been able to lift most of its restrictions. This has resulted in a significant boost in economic activity, with GDP growth forecasted to reach 5.1% in 2021, according to the Reserve Bank of New Zealand.
2. Positive Trade Outlook
New Zealand is a major player in the global trade market, with its primary exports being agricultural products, dairy, and meat. The country has been able to maintain strong trade relationships, particularly with China, which has helped boost its economy. With the global trade market showing signs of recovery, New Zealand is expected to benefit greatly, further adding to the bullish momentum.
3. Risk-On Sentiment
The decrease in uncertainty surrounding the pandemic and the reopening of economies has shifted market sentiment towards risk-on mode. Investors are now more willing to take on riskier assets, such as the NZD, which has also contributed to the bullish momentum.
Implications of Breaking the Barrier
The break of the 200-DMA barrier has significant implications for the NZD/USD pair and the overall market. Here are a few key takeaways:
1. Bullish Momentum Expected to Continue
The 200-DMA is a strong resistance level, and its break signifies a shift in market sentiment. This not only gives a boost to the NZD/USD pair but also sets the stage for further bullish movement. Investors are now more confident in the market, and we can expect the momentum to continue in the coming weeks.
2. New Targets and Resistance Levels
With the 200-DMA barrier broken, analysts and traders are now focusing on the next resistance level of 0.6600. This is a psychological level, and a break above it could set a new target for the pair. Moreover, with the 200-DMA now acting as a support level, we can expect further upward movement towards this target.
3. Opportunities for Traders
The break of the 200-DMA barrier has created a great opportunity for traders to enter the market and capitalize on the bullish momentum. With proper risk management, traders can take advantage of the positive sentiment and profit from the expected upward movement of the pair.
Conclusion
The break of the 200-DMA barrier by the NZD/USD pair has come as a breath of fresh air for investors and traders. It signifies a shift in market sentiment and opens up new opportunities for profit. With the strong economic recovery, positive trade outlook, and risk-on sentiment, the pair is set to continue its bullish momentum with a new target of 0.6600 in sight. As always, it is important to conduct thorough research and use proper risk management strategies before making any investment decisions.
