FxWirePro

AUD/NZD Chartpack - Technicals & Trade Setup

FX:AUDNZD   Australian Dollar / New Zealand Dollar
AUD/NZD shooting star nudges below DMAs again, bears shrug-off despite gap-up pattern on RBA minutes – Uphold short hedges:

Aussie crosses have still been vulnerable as the Reserve Bank of Australia (RBA) minutes of the May meeting left scope for interpretation, the RBA governor Philip Lowe was very explicit in his subsequent speech: in June the bank was going to consider the case for lower interest rates. In view of his comments on inflation as well as the growth and labor market outlook, this can only be seen as the announcement of a rate cut.

Technically, AUDNZD seems weaker as the current price remains well below DMAs.

Chart and candlestick patterns formed: The AUDNZD’s shooting star pattern at 1.0625 level has plummeted prices below DMAs in the minor trend. While bulls are struggling to get momentum despite the occurrence of dragonfly doji patterns on the major trend.

Dragonfly doji pattern candles have occurred at 1.0507 and 1.0422 levels on monthly terms, consequently, the bulls are attempting to take-off rallies above EMAs but no substantiation from the trend indicators.

The major trend in the consolidation phase, that has lasted for more than 5 years, is now stuck in the range, both leading and lagging oscillators indicate weakness. 

As the FX market had already priced the RBA’s move towards a more expansionary monetary policy , that is likely to justify a prolonged downtrend in AUD.

Trade tips: At spot reference: 1.0565 levels, contemplating prevailing technical conditions in the near-term, we advocate tunnel spread options strategy on an intraday trading basis, using upper strikes at 1.0583 and lower strikes at 1.0542 levels.

The trading strategy likely to fetch leveraged yields that would be exponential than spot trades when the forward FX prices keep dipping but remain above lower strikes on the expiration.

Short hedge: On hedging grounds, we wish to uphold shorts in futures of June’19 delivery with anticipation of the continued major downtrend.

Currency Strength Index: FxWirePro's hourly AUD spot index is inching towards -93 levels (which is bearish ), while hourly NZD spot index was at -41 ( bearish ) while articulating (at 07:38 GMT ).
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