June 2 (Reuters) - A strong monthly bull trend for the Australian dollar versus the New Zealand dollar might be about to reverse as technical signals give warning.

The monthly candlestick chart recorded a bearish engulfing pattern in May, which suggests AUD sellers might have gained the upper hand. A bearish engulfing pattern is a two-candle reversal signal that appears after an upward move. The first candle is a smaller bullish candle. The second candle is a larger bearish candle whose real body completely engulfs the first candle's real body. Like all candlestick patterns, it's not reliable on its own and is best confirmed with other indicators or price action.

AUD/NZD also formed a bearish key month reversal, a similar pattern to the engulfing line. A key reversal month is a chart pattern that signals a potential change in market direction. Occurring within a single trading month, it features a new high or low, followed by a sharp price shift and a close beyond the previous month's trading range. It suggests that buyers initially pushed the price up, but sellers took control later in the month, exhausting the bullish momentum.

Fibonacci retracement levels taken off the 1.0653 to 1.2282 bull trend provide downside targets. The initial retracement levels are 1.1898, 1.1660 and 1.1468, 23.6%, 38.2% and 50% Fibonacci levels, respectively.
AUD/NZD Monthly chart:


(Peter Stoneham is a Reuters market analyst. The views expressed are his own)