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AUDNZD Approaches Key Inflection Point- 1.0825 Make or Break

By , Currency Strategist
03 April 2014 20:07 GMT

Talking Points

  • AUDNZD rally at risk below key resistance threshold
  • Immediate scalp bias against 1.0825
  • Playing the trendlines above the March High

AUDNZD Daily Chart

Forex-AUDNZD-Approaches-Key-Inflection-Point--1.0825-Make-or-Break_body_Picture_2.png, AUDNZD Approaches Key Inflection Point- 1.0825 Make or Break

Chart Created Using FXCM Marketscope 2.0

Technical Outlook

  • AUDNZD at key resistance threshold 1.0817/28 / March 2013TL resistance
  • Key support 1.0738/46& 1.0645- bullish invalidation
  • Topside breach targets resistance objectives into 2014 high &1.0978/85
  • Look for daily RSI reversal sub-60 for validation
  • Limited event risk until April 9th- Australian Employment & Chinese Trade Balance

AUDNZD Scalp Chart

Forex-AUDNZD-Approaches-Key-Inflection-Point--1.0825-Make-or-Break_body_Picture_1.png, AUDNZD Approaches Key Inflection Point- 1.0825 Make or Break

Notes: Although the weekly opening range did clearly break to the topside with the move surpassing 1.0712, our immediate focus is now against the 1.0812/25 key resistance range. The region is defined by the 61.8% extension taken from the advance off the 2014 low, the 100-day moving average, trendline resistance dating back to the 2013 high and the February 4th close (2014 high-day). Intra-day RSI divergence and a trendline trigger break earlier today has us holding shorts against this high with a move below 1.0746/38 offering further conviction on short exposure.

On a side note, it’s worth noting that the current price signature closely resembles what we saw in August - November of 2013. That was just before the pair turned over into fresh yearly lows. While it’s too early to tell whether we will repeat this pattern, a decisive move below the March low would put the broader downtrend back into focus eyeing the 2014 low at 1.0490 and the 2005 low at 1.0428.

Bottom line: the pair is coming into a key inflection point here and the topside remains vulnerable below 1.0825. Look to sell rallies / breaks of support while below this level with a move below the weekly ORL suggesting a more significant high may have been put in. That said, we’ll respect a breach above this threshold with such a scenario shifting our near-term scalp bias back to the topside with immediate targets seen at 1.0850/57 and the 1.09 region. Follow the progress of this trade setup and more throughout the trading week with DailyFX on Demand.

* It’s extremely important to give added consideration regarding the timing of intra-day scalps with the opening ranges on a session & hourly basis offering further clarity on intra-day biases.

Key Threshold Grid

Entry/Exit Targets

Timeframe

Level

Significance

Resistance Target 1

Daily / 30min

1.0812/25

61.8% Ext / Feb 4th Close / 100DMA / TL Resistance

Bearish Invalidation

Daily / 30min

1.0850/57

100% Extension / 78.6% Retracement

Break Target 1

Daily / 30min

1.0900/05

38.2% & 88.6% Retrace(s) / Jan High

Break Target 2

Daily

1.0945

2014 High

Break Target 3

Daily / 30min

1.0978/85

100% & 1.618% Extension(s)

Resistance Target 1

30min

1.0770

61.8% Retracement

Bullish Invalidation

Daily / 30min

1.0738/46

23.6% & 50% Retrace(s) / Last Week’s High / TL

Break Target 1

30min

1.0712

Weekly ORH

Break Target 2

30min

1.0682

50% Retracement

Break Target 3

Daily / 30min

1.0641/46

Weekly ORL / 61.8% Retracement

Break Target 5

30min

1.0595

78.% Retracement

Average True Range

Daily (20)

74

Profit Targets 17-19pips

*ORH: Opening Range High

*ORL: Opening Range Low

Other Setups in Play:

---Written by Michael Boutros, Currency Strategist with DailyFX

For updates on this scalp and more setups follow him on Twitter @MBForex

To contact Michael email mboutros@dailyfx.com or Click Here to be added to his email distribution list

Join Michael for Live Scalping Webinars on Thursday mornings on DailyFX Plus (Exclusive of Live Clients) at 12:30 GMT (8:30ET)

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03 April 2014 20:07 GMT