It's our 19th anniversary!

Short-term Trading Idea FX AUD/NZD – Bear Speculation: Rebound From Resistance Zone

Trading opportunities for currency pair: growth of the Aussie has stopped at an important resistance level which was formed from three projections. Daily indicators are showing a fall for the AUD/NZD. I suggest looking at 1.0445 as a target level.

The idea on the AUD/NZD pair from 13th April didn’t come off. It was assumed that sales of the Aussie would resume from 1.0300-1.0365 with a target of 0.97 due to expectations that the RBA would lower interest rates.

Before I published that idea, on 7th April the Reserve Bank of Australia (RBA) left rates at 2.25%; going against a forecasted reduction. By doing this the regulator pushed back the forecast for the reduction in the rate to May. This is precisely why I was looking at a fall for the Australian dollar via a roll back. As I saw it, by the end of April they should have been a fall for the AUD/NZD.

On 5th May the RBA dropped their base rate from 2.25% to 2%. The AUD/USD rate reacted to the decision, but the reaction was the opposite to that of the regulator. The Australian dollar started to grow throughout the market. The trading idea was cancelled out at a growth above 1.045.

Furthermore, data from New Zealand wasn’t the best, facilitating a rise for the AUD/NZD cross. The New Zealander morphed into a weak link. Over the past few days, pressure on the New Zealander has been intensifying on the back of growing market expectations in relation to the central bank dropping rates.

In a speech on Wednesday, 13th May, the governor of the Reserve Bank of New Zealand (RBNZ), Graeme Wheeler, complained about the excessive strength of his currency and declared that the central bank will drop their rates if necessary. The RBNZ will convene again on 11th June. The RBA is publishing its minutes from its last meeting on 19th May.

The AUD/NZD rate renewed from a minimum of 1.0022 to 1.0887 (+885 points). Today I decided to take another risk by doing an idea on this currency pair. The technical side interests me here more than the fundamental side.

Now let’s talk about what has really caught my eye on this pair. The growth in the Aussie stopped at an important resistance level which formed from three projections. The first projection formed from the 1.0491 and 1.0621 minimums (dotted line). The second comes from the trend line (continuous line). The third is a horizontal resistance at 1.0916.

The AUD/NZD rate has fallen from a maximum of 1.0887 to 1.0760 (-46.5% from the weekly candle of 1.0887 to 1.0610). If we take 50% from a growth of 1.0022-1.0887, then we get a level of 1.0445. This is the level that I propose as a target. The daily indicators are signaling a fall for the AUD/NZD.

Why not take advantage of the improved version of the Trader’s Calculator.

Calculate the swap and point cost >>>



Forecasts which are made in the review constitute the personal view of the author. Commentaries made do not constitute trade recommendations or guidance for working on financial markets. Alpari bears no responsibility whatsoever for any possible losses (or other forms of damage), whether direct or indirect, which may occur in case of using material published in the review.

Back to top