Consolidation or Topping Pattern in AUD/NZD?
- Cycles turning negative on cross
- H&S pattern developing on the daily
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AUD/NZD has responded well of late to key cycle turning points. The low in mid-July, for instance, came almost exactly 8.6 years from the major low in 2005. We think there is a good chance that the turn will mark an important low. However, we do see some cyclical headwinds over the next few weeks which should see the cross come under a bit of pressure as it enters a corrective phase. The daily chart shows a potential head & shoulders pattern that if triggered on a move under 1.0920 will confirm that at least a minor top is in place. We like selling the cross on a break of 1.0920 for quick counter-trend trade. The 200-day moving average near 1.0835 and the 61.8% retracement of the July/August advance at 1.0785 are clear downside attractions.
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Charts Created using Marketscope – Prepared by Kristian Kerr
Key Event Risk in the Week Ahead:
LEVELS TO WATCH
Resistance: 1.1000 (Psychological), 1.1052 (YTD high)
Support: 1.0925 (neckline), 1.0890 (Fibonacci)
Strategy: Sell AUD/NZD
Entry: Sell AUD/NZD on a break of 1.0920
Stop: 1-day close above 1.0950
--- Written by Kristian Kerr, Senior Currency Strategist for DailyFX.com
To contact Kristian, e-mail email@example.com. Follow me on Twitter at@KKerrFX.
DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.