The main pick, personal for me is watching AUD/NZD. We can see that this is a trending chart and the main reason for this is because they showed the world, how to handle pandemics. This can watch as a two-case scenario. Why? Well from the fundamental point of view, we have as I mention before, handle pandemics very well, today New Zealand reports 0 cases in the whole country. Investors can watch this from the angle as like: okay they handle the situation very well, the economy is stable, maybe at the moment New Zealand is the safe-haven destination. But on the other side, we have also Australia who is handling the situation also as well(they reported today 2 new cases), but the new Bird flu: Russia detects the first case of H5N8 bird flu in humans, which can give also a huge boost to an Australian Dollar because as we know that Australia is the second-largest producer of gold(in big case they are connected) and when something wrong is going on at the geopolitical scene, world health scene, gold is going up as a world uncertainty.
When to start thinking about entering into the trade? My opinion is to wait and anticipate the behavior at the Asian session and start to look for a trade at the European session( Frankfurt and London exchange). But here is a catch. Well if you wanna keep trade for a whole day and start looking for the next Asian session and I would watch a RBNZ( Reserve Bank of New Zealand) rate statement. If RBNZ keeps the interest rate, or they raise them, we will see short-term volatility on the market on the downside against AUD, but if they wanna lower them, they will push the market upside against NZD.
From a technical point of view as I mentioned before, we have a very interesting trading market, in the sell zone. For sell setup, we have a regular bearish divergence and that can be our sign, okay maybe is the market out of steam, and maybe is this a reversal time for AUD/NZD. Where to enter for the sell option? Well, I will wait for breaking the triangle pattern support level and waiting for the bearish engulfing pattern or some other bearish price action. Extra confirmation will be breaking EMA of 21 and 50 and if the price starts to move out below our EMA˙s, it can be a sign of good bearish momentum. TP will be a price of 1.06126( depends on your support and resistance strategy). Our SL can be above the nearest wicks.
For buy options, I prefer to wait to break the triangle pattern, making HH, HL with of course price action, testing our support level and there is at the moment EMA of 21 and 50 below and that can be a sign of bullish momentum. SL will be below the nearest LL and support line.
WHAT DO YOU THINK ABOUT THIS SETUP?
Please let me know in the comment section!
THANKS FOR READING!
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Remember this analysis is not 100% accurate. No single analysis is. To make a decision follow your own thoughts. The information given is not Financial advice.
Good analysis. Please can you clarify a bit about how NZD interest will affect AUDNZD. I think the RBNZ statements will be release on Wednesday during London session. If NZD interest is the same or higher NZD will be strong than AUDNZD will go down. If NZD interest is lower then NZD will be weak then the AUDNZD will go up (continue trend). Is this correct or I got it wrong?
OmnipotentPower
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@DoctorTanzanite, First of all they will be release statement at 02:00 am(ETC+1), if RBNZ keeps same interest rate or they wanna to push them higher, it will push AUDNZD down. Why ? Because when you keep same interest rate it means that economy is good in country, but if they push them up, it means that economy is to strong, inflation is bigger than 2-3% and RNBZ wanna to make economy slow down. If they push down interest rate it means that economy is weak at the moment and RNBZ wanna to take some relaxation and AUDNZD will go strongly up.
DoctorTanzanite
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@OmnipotentPower, Thank you for your detail explanation. Your analysis is excellent. I see RBNZ kept interest rate the same and now AUDNZD is in down trend. Please one more question. Now that they kept interest rate the same and the trend is going down because of good economy (good NZD). When will the trend be likely to change direction? Is it until RBNZ release another report on interest rate or does it depend on how Australia economy perform? Like now we are going down, say next week Australian economy changes, can that then make NZD weak and push AUDNZD up? I am trying to understand the fundamental behind AUDNZD price movement
DoctorTanzanite
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@OmnipotentPower, Also based on the current AUDNZD move, do you think this is a long term down trend or just minor trend? How far do you anticipate this trend to go down? I saw a big wick price reject on 4HR time frame, I think this could go down to the lower swing at 1.0540. Is this a fair assessment?
OmnipotentPower
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@DoctorTanzanite, My opinion that currency like the Australian Dollar, British Pound will get out of steam, because they were the best-performed value on the market. The reason behind this is that the Australian Dollar was moved up by low case infected in the whole country, bad performance of USA economy and behavior of gold on the market. If you know Australia is I think second-largest producer and exporter of gold. I can notice that when for example the USA report bad result at labor field or some rise of infected, gold is going up- Australian Dollar is going up. For British Pound, my opinion that the Pound was so strong because they have a low infected ratio and they are the second country in the whole world and first in Europe, which vaccinated their peoples in the country. Big reversal can be that WHO reported a big decrease in infections in the whole world and supplies of vaccine is going up after they had problems with exporting it.
DoctorTanzanite
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@OmnipotentPower, Ok thank you very much this is excellent information. I should work on my fundamentals