Talking Points
AUDNZD rally vulnerable at critical resistance range
Weekly / Monthly opening ranges remain constructive
Major event risk on tap tonight from New Zealand
AUDNZD Daily Chart
Chart Created Using FXCM Marketscope 2.0
Technical Outlook
AUDNZD testing key resistance range 1.0875/82
Breach targets topside resistance objectives at 1.0906, 1.0945, 1.1007 &1.1027/35
Interim support 1.0826, 1.0767- bullish invalidation
Daily RSI trigger/50 breach- constructive
Event Risk Ahead: RBNZ Interest Rate Decision and Trade Balance data tonight
AUDNZD 30min Chart
Notes: The AUDNZD continues to trade within the confines of a well-defined ascending channel formation off the July lows and a break of the weekly & monthly opening range highs yesterday keeps the broader focus on the pair weighted to the topside while above this week’s low at 1.0767. That said, building RSI divergence into key resistance at 1.0875/82 leaves the trade vulnerable for a near-term pullback ahead of event risk later tonight.
Bottom line: we’ll favor buying pullbacks in the pair with a breach/close above 1.09 targeting subsequent resistance objectives. A break below 1.0767 invalidates this particular setup with such a scenario risking a deeper correction back towards the January 2014 trendline support.
Caution is warranted heading into the interest rate decision tonight with the event likely to fuel added volatility in kiwi crosses. Look for a reaction to either validate a breach above key resistance or possibly trigger a near-term correction lower to offer more favorable long entries heading into the start of August trade.Follow the progress of this trade setup and more throughout the trading week with DailyFX on Demand.
* It’s extremely important to give added consideration regarding the timing of intra-day scalps with the opening ranges on a session & hourly basis offering further clarity on intra-day biases.
Key Threshold Grid
Entry/Exit Targets
Timeframe
Level
Technical Relevance
Bearish Invalidation
Daily / 30min
1.0875/82
61.8% Retracement / 61.8% Ext / 200DMA
Break Target 1
Daily / 30min
1.0905
38.2% Retracement
Break Target 2
Daily / 30min
1.0945
78.6% Retracement
Break Target 3
30min
1.0987
88.6% Retracement
Break Target 4
Daily / 30min
1.1008
2014 High Close
Break Target 5
Daily / 30min
1.1027/35
May Close High
Support Target 1
Daily / 30min
1.0822/26
50% Retracement / Tues Low
Bullish Invalidation
Daily / 30min
1.0767/77
Weekly ORL / 38.2% Retracement / 100DMA
Break Target 1
30min
1.0746
23.6% Retrace / May Swing Low / Dec Close Low
Break Target 2
30min
1.0708
June Low
Break Target 3
Daily / 30min
1.0647/48
76.4% Retracement / May Low
Break Target 4
Daily
1.0619
76.4% Retracement
Average True Range
Daily (20)
62
Profit Targets 16-19pips
*ORH: Opening Range High
*ORL: Opening Range Low
Other Setups in Play:
NZDCAD Testing Range Support Ahead of RBNZ- 9295 Key
GBPJPY Eyes Major Inflection Zone- Weekly Opening Range in Focus
NZDJPY Reversal Underway- Scalps Target Key Support at 88.20
GBPUSD Posts Outside Reversal Off Key Support- Bullish Above 1.7065
NZDUSD Opening Range Setup- Rally Vulnerable Sub 8850
AUDUSD July Range Targets Key Support- Shorts Favored Sub 9440
EURUSD July Opening Range Play- Shorts Favored Sub 1.37
AUDCHF Rebounds Off Key Support- Longs Favored Above 8360
—Written by Michael Boutros, Currency Strategist with DailyFX
For updates on this scalp and more setups follow him on Twitter @MBForex
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Source: Daily fx