Jump to content

AUD/NZD Trade idea


Recommended Posts

Hi all,


Please see below for an interesting take on the AUD/NZD, provided by our Market Analyst, Chris Weston.


Trade idea: Sell AUD/NZD on a daily close (8am AEST tomorrow) below NZD1.0886, placing a stop loss at NZD1.1010.

AUD/NZD price at the time of writing: NZD1.0873


I am watching for a daily close below the 12 May high (NZD1.0886 – circled) and 38.2% retracement of the April to July rally (NZD1.0897) to look at short positions. This would effectively mean I am willing to accept a worse price, but I am waiting for confirmation from the market that the buyers are not prepared to step in and support key levels.


The trend is progressively becoming more bearish and as you can see from the daily chart there is a confluence of support levels that I am keen to see the pair close below. In terms of identifying a stop loss, I feel that a stop loss above the 7 October high and rising trend (drawn from the July pivot low) at NZD1.1010 makes sense, as this would suggest a stronger move higher and my initial view incorrect.


Looking at the various oscillators, the fact the nine day RSI is at low levels is a reflection of the recent sell-off and is not yet grossly oversold. Stochastic momentum is clearly at low levels, but it feels as though rallies should be contained within a progressively bearish trend.


The 50% retracement of the April to July rally is a clear initial target at NZD1.0733, although I would look to see how the pair is reacting around this level, as it may even pay to add to potential short position if the momentum continues to build.

This is a technical idea based on momentum and to a degree trend. I have placed a five (blue) and ten (red) moving average on the chart to highlight the trend.





This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer and quarterly summary.

Link to comment

Also, Chris' insight on a few other pairs:


Despite the positivity to the CAD, AUD/CAD interestingly printed a bullish key day reversal yesterday. As long as yesterday’s low of C$0.9248 can hold, I wouldn’t be surprised to see a move into C$0.9500. Perhaps a better way to express a short-term positive view on the AUD is against the EUR, although my conviction to be short EUR/AUD would be significantly heightened on a close through the August and September double bottom at A$1.5600. I would then even look at adding to short positions on a break of the April uptrend, which currently sits around A$1.5400.


The full article can be found here: Asian markets in a reflective mood

Link to comment

 Thanks for posting these trading ideas.  I have been watching the AUD/NZD for a while.  I have been stuggling to identify an entry point due to the mixed indicators.  The RSI and STOCH does suggest oversold but of course a close below the support could suggest a further move down.


Attention seems to have moved away from some of the Asian and other markets with focus on the USD and GBP, dominated by a potential interest rate rise.


I'll be watching this one.  Anyone else looking at this pair to trade?

Link to comment

Thanks for the Trading Idea.

Great to hear specific trades from IG research.


Having fallen from mid 1.13s I will give this a miss for now.

I prefer trading short the JPY and EUR atm.

I have gone long GBPJPY for now and should have added AUD,CAD and NZD against the JPY as well.

Might wait for a pullback now before enering these trades as well.

Link to comment

I like the short term trend developing and could run up to potential supply around the Y186 area. RSIs are smack bang in the mid range (51), so be good to see a continued push higher, in turn pushing the momentum focused players into the trade.


The hourly looks quite compelling too.


I looked at AUDUSD ideas today as well as I just think in this enviroment of falling volatility we are seeing funds looking to pick up higher yield assets (carry structures), which will include AUD, NZD and emerging market FX too. A closing break above 18 Sept high of 0.7280 (right here now) would open up a more pronounced move into the 74 or 75 handle IMO.


There is a correction underway in the USD and while I am a longer-term USD bull, it seems the damage done to the US economy (from USD strength) is really hitting home to the Fed. John William (SF fed president) floated the idea cutting the rate banks are paid to hold funds on the Fed balance sheet to negative. While that is a long way off, negative rates would cause banks to pull capital held on the Fed's balance sheet earning 20 basis points (or 0.2%) and much of this would flow offshore causing USD outflows. One to watch but risk of further USD weakness is real to me.

Link to comment


This topic is now archived and is closed to further replies.

  • Posts

    • Sainsburys full year earnings and Unilever’s first quarter trading update both say the same thing, UK consumers are in for higher prices. The war in Ukraine, supply chain issues and the effects of ongoing Covid all to blame.      
    • US Dollar (DXY) Daily Price and Analysis US Q1 GDP may stall the greenback’s advance. A 20-year high nears for the US dollar. The multi-month US dollar rally continues with the greenback printing a fresh high today ahead of the first look at US Q1 GDP at 12.30 GMT. The US dollar basket (DXY) has been boosted by renewed weakness in the Euro and the Japanese Yen, as investors move from lower-yielding to higher-yielding currencies, while safe-haven flows continue to benefit the greenback. The US growth release later in the session is expected to show a sharp slowdown from the robust Q4 figure of 6.9%. The markets are currently pricing in growth of just 1% for the first three months of this year, with the slowdown mainly due to a reduction in inventory accrual over the quarter. This release is unlikely to move the greenback, unless there is a large miss or beat, as the Fed believe that 2022 US growth will be robust enough to let them tighten monetary policy sharply without damaging the economy. The latest US Core PCE data – the Fed’s preferred inflation reading – is released on Friday and this may have more effect on the US dollar than today’s GDP data. For all market moving economic data and events, see the DailyFX Calendar. The ongoing US dollar rally has been aided by weakness across a range of G7 currencies including the Euro, the Japanese Yen, and the British Pound. The Euro continues to battle with lowly growth expectations, exacerbated by energy concerns, the British Pound is mired by weak economic data, while the Japanese Yen is in freefall as the BoJ continues with its ultra-loose monetary policy.   The US dollar continues to press higher and looks set to break above 103.96, the March 2020 high. Above here the US dollar would be back at levels last seen nearly two decades ago. The March resistance will likely hold in the short-term, especially with month-end portfolio rebalancing at the end of the week, but US dollar strength is set to continue in the months ahead. USDOLLAR (DXY) WEEKLY PRICE CHART – APRIL 28, 2022 {{THE_FUNDAMENTALS_OF_BREAKOUT_TRADING}} What is your view on the US Dollar – bullish or bearish?   Apr 28, 2022 | DailyFX Nick Cawley, Strategist
    • While Tesla has nothing directly to do with Elon Musk buying Twitter - TSLA stock closed down 12% on news that Musk may have to sell stock and use other holdings to stand against the loan to finalise the purchase of the social media giant.        
  • Create New...