Where to rebuy AUDNZD
Tony Sycamore September 24, 2019 6:15 AM
If we were to narrow down our best trade ideas to complete a trade review for the year thus far, AUDNZD would feature prominently as two breakout type trades played out in almost textbook precision. After AUDNZD last week all but reached the 1.0850 target mentioned in this article https://www.cityindex.com.au/market-analysis/audnzd-trade-receives-a-boost/ we discuss two upcoming tier-one macro events and their implications for AUDNZD, as well as possible levels to rebuy the cross.
If we were to narrow down our best trade ideas to complete a trade review for the year thus far, AUDNZD would feature prominently as two breakout type trades played out in almost textbook precision.
After AUDNZD last week all but reached the 1.0850 target mentioned in this article https://www.cityindex.com.au/market-analysis/audnzd-trade-receives-a-boost/ we discuss two upcoming tier-one macro events and their implications for AUDNZD, as well as possible levels to rebuy the cross.
The first event occurs tonight as RBA Governor Lowe gives a speech titled “An economic update” at an Armidale Business Chamber dinner from 8:05 pm AEST. Following on from last week’s dovish RBA minutes and the unemployment rate rising to a 12-month high, the market is currently 80% priced for a rate cut to 0.75% at the next RBA meeting on October 1. In this context, a dovish speech tonight is largely priced. The surprise would be if Lowe were to push back against current market pricing.
Then follows the RBNZ interest rate meeting tomorrow at midday AEST. After a surprise 50bp cut in August, the RBNZ is expected to keep the OCR on hold at 1.00% while leaving the door open to further cuts before year-end. Once again, an outcome already priced into markets.
This suggests that AUDNZD is unlikely to see a sharp fall as a result of either of these events - a view which is supported by our Elliott Wave technical analysis. The strong rally to last weeks 1.0840 counts as a minor Wave iii, and the current consolidation is viewed as a minor Wave iv correction.
In terms of how far the Wave iv correction will unfold, initial support resides 1.0730/10 which includes the April high and the four consecutive daily highs in September. Below here 1.0630/20 offers medium-term support including the 38.20% Fibonacci retracement from the August 1.0264 low up to last weeks 1.0840 high.
In short, I am expecting pullbacks in the AUDNZD to be relatively shallow. Should a pullback that displays corrective characteristics take AUDNZD back to 1.0630/20 support area and feature a bullish reversal candle, it will be looked at closely as a buying opportunity in AUDNZD targeting retest of 1.0850.
Source Tradingview. The figures stated are as of the 24th of September 2019. Past performance is not a reliable indicator of future performance. This report does not contain and is not to be taken as containing any financial product advice or financial product recommendation
TECH-FX TRADING PTY LTD (ACN 617 797 645) is an Authorised Representative (001255203) of JB Alpha Ltd (ABN 76 131 376 415) which holds an Australian Financial Services Licence (AFSL no. 327075)
Trading foreign exchange, futures and CFDs on margin carries a high level of risk and may not be suitable for all investors. The high degree of leverage can work against you as well as for you. Before deciding to invest in foreign exchange, futures or CFDs you should carefully consider your investment objectives, level of experience, and risk appetite. The possibility exists that you could sustain a loss in excess of your deposited funds and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with foreign exchange, futures and CFD trading, and seek advice from an independent financial advisor if you have any doubts. It is important to note that past performance is not a reliable indicator of future performance.
Any advice provided is general advice only. It is important to note that:
- The advice has been prepared without taking into account the client’s objectives, financial situation or needs.
- The client should therefore consider the appropriateness of the advice, in light of their own objectives, financial situation or needs, before following the advice.
- If the advice relates to the acquisition or possible acquisition of a particular financial product, the client should obtain a copy of, and consider, the PDS for that product before making any decision.
StoneX Financial Ltd (trading as “City Index”) is an execution-only service provider. This material, whether or not it states any opinions, is for general information purposes only and it does not take into account your personal circumstances or objectives. This material has been prepared using the thoughts and opinions of the author and these may change. However, City Index does not plan to provide further updates to any material once published and it is not under any obligation to keep this material up to date. This material is short term in nature and may only relate to facts and circumstances existing at a specific time or day. Nothing in this material is (or should be considered to be) financial, investment, legal, tax or other advice and no reliance should be placed on it.
No opinion given in this material constitutes a recommendation by City Index or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although City Index is not specifically prevented from dealing before providing this material, City Index does not seek to take advantage of the material prior to its dissemination. This material is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.