AUD/NZD at Key Inflection Point Ahead of RBNZ

2016-11-07 19:16:00

Michael Boutros,

Talking Points

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

AUD/NZD Daily

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

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