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Airline stocks soar, AUD, NZD pop, crypto forms bottom reversal pattern

qantas

US stocks last week had their best run of the year since January’s sell-off. Stocks sensitive to a better economy are outperforming growth stocks amid rising bond yields and the US Federal Reserve’s hawkish guidance. At the same time, cryptocurrencies are showing signs of a bottom reversal. 

Airline stocks surged in Australia New Zealand

Airline shares have rallied, with major Asia economies planning to reopen borders to international visitors. Thailand has restarted its “Test & Go” programme on 1 February, Australia plans to reopen on February 21, and New Zealand in October.  

Major US carriers including Delta Air Lines, American Airlines, and United Airlines all rose between 2%-5% on Monday. But the star stocks are the airlines in both Australia and New Zealand, with Qantas Airways (ASX: QAN) up by 13.5% and Air NZ (NZX: AIR) up by 17.6% from their lows on 1 February. The two stocks could continue upward momentum to test the November highs at $A5.90 and $NZ1.68 respectively. 

Qantas Airways daily chart

The chart shows a potential near-term pullback to the key support levels.

QAN is pulling back from a two-day rally, with imminent support at $A5.36, and pivotal support at $A5.2 (Fib 50.00%, the previous resistance). The potential long target is firstly at $A5.60, then the November high at $A5.9. 

Air New Zealand daily chart

The chart shows a breaking up of the long-term descending trend line.

AIR is most likely to continue its strong rebounding momentum, with key support at the descending trendline at $NZ1.62, which is also the Fib 38.20% retracement level. The potential next long target is first at $NZ1.68 (Fib 50.0%), then $NZ1.72(the October high).

AUD and NZD strengthen against USD

Both the Australian dollar and New Zealand dollar show signs of strengthening against the USD, after the two countries announced plans to reopen borders, with expectations for tourism to boom.

NZD might be strengthening against the AUD in February amid the more hawkish policy from the RBNZ. The central bank had two rate hikes in 2021 and is expected to keep increasing rates while reducing its balance sheet in the meeting later this month. The RBA ends its bond purchases this month and indicated it will remain patient, while closely watching inflation.

AUD/USD daily chart 

AUD/USD is set to test key resistant levels.

AUD/USD is to test the pivotal resistance at the 20-day and 50-day MAs, around 0.7150, if it can break up, then the next potential long target will be at 0.7250, which is the 100-day MA and the long-term descending trendline, while the key support is at the recent low at 0.6987.

NZD/USD daily chart

NZ/USD looks to test the lower band of the descending channel.

NZD/USD is trying to break above the key resistance level at the lower band of its descending channel at 0.6664. The pair might approach the 50-day MA at 0.6743, then the 100-day MA at 0.6880, if it can bounce back to the channel, while the key support is at the recent low at 0.6530. 

Crypto markets show signs of bottom-reversal

The leading crypto tokens jumped over the weekend, triggered by some positive news. According to Bloomberg, KPMG in Canada has added bitcoin and ethereum to its corporate treasury as an emerging technologies asset class. Tesla CEO, Elon Musk, also revealed it was holding nearly US$2bn worth of bitcoin at the end of last year. It looks like dip-buyers are emerging into the oversold markets for any positive news. With the growing adoption of blockchain technology, the digital coins markets might be seeing a bottom reversal in the near future.

Bitcoin Daily chart

A potential bottom reversal is being formed.

Bitcoin shows a very strong signal of its bottom reversal pattern. Since it has already broken up the long-term descending trend line, the rebounding is likely to continue and test the potential intraday resistance at the 50-day MA at 44,885, then the 100-day MA at 51,000, while the potential key support is at the previous resistance 39,264 at the trendline. 

Ethereum Daily

A potential bottom reversal is being formed for etherum as well.

Like bitcoin, ethereum is likely to approach the next potential long target at the 50-day MA around 3,500, with the imminent resistance at yesterday’s high at 3,171 And the next potential long target is at 3,800 (Fib 61.80%), while the key support is at the 20-day MA at 2,870.


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