JamesHelliwell
Long

Long AUDNZD: Inverse H&S formation targeting 1.2345

FX_IDC:AUDNZD   Australian Dollar / New Zealand Dollar
146 0 3
A huge inverse H&S formation has formed on the weekly chart of AUDNZD             with a successful upside break of the 1.1280 neckline targeting a measured move to the long term 62% Fibonacci retracement level at 1.2345

With the Australian dollar             gaining strength from what appeared to be a failed attempt at forming this potentially bullish pattern earlier this year, and oversold conditions and positive divergence on the momentum indicators, this could produce an incredible trade if the pattern is validated by a weekly close above the neckline and the 38% Fibonacci retracement level (1.1450) is claimed.

Whilst traditionally you would wait for confirmation of a break of the neckline (around 1.1280) before entering the trade, more aggressive traders may look to enter early in half size with a suggested stop around 1.0300 (1.0645 last), and add on the break. Even if price tests 1.1280 and fails to break resistance (invalidating the setup), then the risk skew still provides an attractive 2:1 payoff.
Comment: Aussie and Kiwi both being sold with short-term yields lower on expectation of rate cuts. Both being sold.

A note of caution for AUDNZD bulls - AUDUSD will be sold if/when equity risk sentiment wanes. With US equities at all-time highs and earnings continuing to disappoint, as well as increased political uncertainty and volatility over the summer months, being long AUD in any cross is a trade you that requires you to monitor closely.
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