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  • AUD/NZD has been sold off in a supply zone and is now testing the bullish commitments at structural support.
  • Bears will wish to see how much demand there is this juncture prior to sticking with the sell-off.

AUD/NZD has proven that the monthly supply zone has held and there are prospects of a continuation to the downside.

However, the price is already testing a critical support structure and the confluence of a 38.2% Fibonacci level. Bears may prefer to wait it out to see if there could be a bullish correction at this juncture. 

Scanning the longer-term time frames is beneficial when seeking a swing trade opportunity and when moving down from the monthly tough the daily, we can see that the price is pulling in some meanwhile demand.

The following is a top-down analysis to how we have got to this juncture and offers prospects of a short swing trade from more preferable risk to reward levels on the daily time frame.

Monthly chart

As can be seen, the price is now testing a support structure following a monthly rejection in the supply zone. 

Weekly chart

The weekly chart illustrates this a little more clearly with the combination of a 38.2% Fibonacci retracement. 

Given how strong the original bullish impulse was, there could be prospects for a deeper correction.

The following daily chart offers such a scenario that that price moves back to test what is now a supposed and new resistance level from which bears will seek entry from a lower time frame, such as the 4 or 6-hour charts:

Daily chart

 

 

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