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AUD/NZD at Key Inflection Point Ahead of RBNZ

AUD/NZD at Key Inflection Point Ahead of RBNZ

2016-11-07 19:16:00
Michael Boutros, Strategist
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Talking Points

  • AUD/NZD testing key support / bullish invalidation at 1.0430
  • Initial resistance at 1.06
  • Updated targets & invalidation levels

AUD/NZD Daily

AUD/NZD Daily Chart

Chart Created Using TradingView

Technical Outlook: Last week we noted that AUDNZD was approaching, “near-term support with the short-bias at risk heading into 1.0430/39 – a region defined by the 61.8% retracement of the September advance & the lower median-line parallel of the ascending pitchfork extending off the July low. I’ll be looking for a near-term exhaustion low into this zone targeting the median-line (~1.0525) & the upper parallel / 1.0600.

The Sunday-open gap turned just ahead of this key support zone (low was 1.0447) with the subsequent rebound checking near-term resistance today at 1.0532/39(January lows). The focus is on a break of this range with the short-bias at risk while above key support.

AUD/NZD120min

AUD/NZD 120min  Chart

Notes: The pair has continued to trade within the confines of this near-term descending pitchfork formation off the October highs with the upper median-line parallel highlighting key near-term resistance into the 1.06-handle. A breach above this region shifts the focus towards the monthly & yearly opens at 1.0638 & 1.0663.

A break below key support invalidates the rebound-play with such a scenario targeting the lower parallels & 1.0362. A quarter of the daily average true range (ATR) yields profit targets of 20-24pips per scalp. Keep in mind that the Reserve Bank of New Zealand (RBNZ) is on tap for Wednesday night in New York with the central bank widely expected to cut its benchmark interest rate by 25 basis points to 1.75%- which would be its lowest on record. From a trading standpoint, I would be looking to fade weakness while above structural support at 1.0436. We covered this setup at length in today’s webinar.

Relevant Data Releases

AUD/NZD Economic Docket

Other Setups in Play:

Looking for more trade ideas? Review DailyFX’s Top Trading Opportunity of 2016

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

Join Michael for Live Weekly Trading Webinars on Mondays on DailyFX at 13:30 GMT (8:30ET)

Follow Michaelon Twitter @MBForex contact him at mboutros@dailyfx.com or Click Here to be added to his email distribution list

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