This particular currency pair representing the two neighbouring economies with some similarities yet different dynamics in which one has larger dependence on mining resource and the other on dairy produce has been in very large sideways move in almost unrecognisable swings and patterns. This is so until you zoom out using larger time frame and look back with adequate historical price.
This massive sideways move since at least 1995 with very wide range which is easily seen using monthly time frame in my screencast chart Link: screencast.com/t/GahgAJyNChyp
From general characteristics of the price action since February 2011, it appears that it is in 5 wave impulsive move to the downside. If this is correct then we could be close to completing (though it still has room to run) this larger sideways congestion with strong counter rally or new bullish cycle ensuing.
However, right now we had congestion during January - October 2014. Many who have posted their charts on this pair are interpreting this as beginning of the new bullish cycle to the upside. They seem to suggest that in addition to some price action analysis, they have taken into account fundamentals of two economies, interest differentials and large institutions positioning.
This is all far too complicated and beyond my ability to analyse and suspect other analyst attempting to do so too. So to resolve issue, I am proposing that you accept the premise, that the stronger economy in the main would likely have stronger currencies too. The one with the stronger economy would likely have stronger equity market out performing the weaker one.
From this supposition, consider: the ratio chart of Australian Stock Index / Newzeland Stock Index. See the chart below ( ) . You will note that since 2011 we have Newzeland Equities out performing that of Australian. In addition it also appears to be in the process of completing a 5 wave decline which is possible in mid-stream ie wave iii of 5 appears to be in progress. If this is correct then AUDNZD pair is likely completing wave i of 5 and is lagging the equity ratio, therefore, any retracement could offer shorting opportunity that have some way to go before this bearish cycle is over.
On completion of this, there would be a possible deep retracement to the upside or new Bullish Cycle to unfold which will offer long opportunities.
The price progression will either confirm the above analysis or otherwise and hopefully assist in resolving the dilemma as to which way the AUD/NZD is headed, positioning you on the right side of the larger trend.
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Yes indeed. Breakout with confirmation would be an excellent long entry opportunity.
jangseohee
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the channel is not done yet unless we have a Bullish MACD & RSi divergence :-)
DanV
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Correct or sequences of higher highs exhibiting bullish move.
jangseohee
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True, the Dow theory but would miss out the near bottom, i tend to jump the gun
DanV
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Sure, even then you still have well defined risk but need some way of ensuring that potential low is in place. Either way it is worth monitoring for now.
jangseohee
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the early i jump the gun with only 10% chances, the earlier i am proven wrong and get out
but if i am tagged into the trend, i can have bigger profit
True this one worth monitoring :-)
Cheers
Jang
HamedAghajani
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Hi Great Forcast: Do you see any size of bottom here?
DanV
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Thank you for that.
Not yet. I think we might have temp bounce before final leg down. TV chart don't have the historical data but there is significant low at 1.02785. My view would be it could drop close to or just spike into to takes stops out before reversing. So I would still be bearish and wait patiently for long entry which I think would be fantastic monster trade just as it has been to the downside. It could Full reversal or big retracement. Either way I am keeping under review.
jangseohee
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if my red channel is valid (after the all time support was broken), then we could really see more downside
tradingview.com/v/BV0KAmne/