The wicks could be warning usThe long topside wicks on the AUD/NZD weekly chart were giving traders a strong message well before Thursday’s weak Australian jobs report, signaling the run-up from the April lows may have run its course and that downside risks were building. Those risks have increased further following the sharp spike in unemployment seen in September. Traders may therefore want to consider selling rallies in AUD/NZD now rather than buying dips, putting short setups on the menu.
Sellers were active on pushes above 1.1350 over recent weeks, making that an ideal entry level for shorts. However, there’s now a decent risk the pair may not get back there, hinting selling around current levels may be required for those looking for downside. Should that be the case, ensure your stop level fits with the desired risk-reward from the trade.
As for potential targets, AUD/NZD did plenty of work either side of 1.1250 back in 2022, putting it on the radar given it’s also located near the 23.6% fib retracement of the April–October high-low. Beyond, the November 2024 high of 1.1180 marks the start of a more pronounced support zone down to 1.1142 where the 38.2% fib level is found. The price was capped below this zone for large periods over the past year, making it screen as a potential target level to reassess the setup should it play out.
Momentum indicators remain in bullish territory, although the break of the uptrend in RSI (14) warns that topside strength is fading. That’s not yet confirmed by MACD, although it’s showing early signs of rolling over toward the signal line. The overriding message is one where bulls should be cautious entering fresh long positions.
Good luck!
DS
