Search ForexCrunch

Both the Aussie and the kiwi fell to deep lows, and made an impressive comeback from these lows. On the daily charts, this looks like a hammer pattern, which indicates the beginning of a big recovery.

In the case of the kiwi, there are no real reasons for diving lower, but for the Aussie, this could be a necessary correction before the next plunge.

AUD/USD

AUD/USD dropped to a near-three-year low, breaking below 0.9388 and reaching levels last seen in September 2010. The pair fell as low as 0.9325, but began a steady recovery from there, trading around a 100 pips higher since then.

The Aussie certainly has reasons to fall: the end of the mining boom (or perception of), lower Chinese growth, weaker economy outside the mining sector and weaker forecasts from practically everybody.

In addition, AUD/USD already encountered hammer patterns on the daily chart, only to recover swiftly. Note the hammer seen at the left side of the graph:

AUD USD Daily Chart June 2013 hammer pattern could be happening technical analysis forex trading

NZD/USD

Kiwi/dollar fell below 0.78 and found itself as low as 77.60, the lowest in a year. Yet again, it made a big recovery from there, topping 0.7880 (over 120 pips) before trading at 0.7870 at the time of writing.

In the case of the kiwi, the economy remains stable and the weaker currency is certainly desired in order to maintain the momentum. However, dropping much lower isn’t warranted: the economy is doing well, and the currency met long-term uptrend support.

NZD USD Weekly Chart June 2013 Close to long term uptrend support technical analysisMore on the Aussie: