Talking Points
AUDNZD reversal off October highs halts at Fibonacci / Trendline support
Risk of near-term bounce shifts focus higher into close of the week
Bullish invalidation with break / close below 1.1320
AUDNZD Daily Chart
Chart Created Using FXCM Marketscope 2.0
Technical Outlook
AUDNZD decline off October highs completes two equal legs down
Support at former trendline resistance / 100% extension 1.1320 (today’s low 1.1324)
Daily RSI trigger-break lacks conviction / Risk for topside correction near-term
Topside resistance objectives at 1.1405, 1.1438 & monthly high at 1.1490
Support break targets 1.1290 and key support at 1.1197- 1.1216
Key Events Ahead: Australian Employment Report on Thursday, China Industrial Production & Retail Sales data this weekend
AUDNZD Scalp Chart
Notes: Although the decline off the October highs has been rather sharp, the pair has now come into a key support zone between 1.1320- 1.1352 that may offer a near-term bounce. The support structure is defined by the 61.8% retracement of the rally off the September low, the 100% Fibonacci extension taken from the decline from last month’s high and former trendline resistance dating back to the June 2013 high. As such, our focus has immediately shifted to the topside against this support region with only a break/close below invalidating our near-term scalp bias.
A long intra-day RSI trigger was identified just ahead of the European open with a break and re-test of trendline resistance warranting near-term long exposure. Look for a breach above former channel support to offer further conviction with such a scenario eyeing subsequent resistance targets. Note that near-term RSI support warrens of a possible pullback with another test of the 100% extension at 1.1320 not off the table before mounting a more meaningful rally. We will attempt to buy on dips / breaks of resistance so long as the pair remains above 1.1320 with a breach of the November opening range high at 1.1490 suggesting that a more significant low may be in place heading into the end of the month.
* 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
Significance
Resistance Target 1
Daily / 30min
1.1351/57
618% Retrace & 78.6% Fib Extension
Resistance Target 2
Daily / 30min
1.1385
61.8% Fib Extension
Bearish Invalidation
30min
1.1405/10
Weekly Opening Range Low / 50% Ext
Break Target 1
Daily / 30min
1.1439
38.2% Retracement / 61.8% Ext
Break Target 2
30min
1.1460
Soft Resistance / Pivot
Break Target 3
Daily / 30min
1.1482/92
61.8% & 23.6% Retrace(s) / Nov Open High
Break Target 4
30min
1.1525
78.6% Retracement / Pivot
Break Target 5
Daily / 30min
1.1560/74
78.6% Retrace / 78.6% Fib Ext
Bullish Invalidation
Daily / 30min
1.1320/24
100% Fib Ext / Current Nov Low / TL
Break Target 1
Daily / 30min
1.1290
78.6% Retracement
Break Target 2
30min
1.1253
88.6% Retracement
Break Target 3
Daily / 30min
1.1197 – 1.1216
1.618% Ext / Sept Low / 2013 Low
Break Target 4
Daily / 30min
~1.1150
Channel Support Dating 2011 / Pivot
Average True Range
Daily
79
Profit Targets 18-20pips
Other Setups in Play:
AUDUSD Scalp Looks to Sell Rallies- Bearish below 9570
USD Setups Heading into November- NZD, JPY Scalp Biases at Risk
AUDJPY Scalp Setup Eyes Key Support- Bias Bearish Below 93.80
NZDUSD Scalps Target Key Reversal Off October High- Bearish Sub 8460
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—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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