This chart has been on my radar for a very long time. I have had a “love/hate” relationship over the last year with this currency pair as we have seen some “near trend line breaks” mid year last year. I had high hopes we would break, but never transpired.
We are faced with a similar situation now with the pair quickly approaching the 1.1100 key resistance for the pair. The reason why its so important is that a little later today we have the RBNZ (Reserve bank of New Zealand) making a decision on rates. Most expect the RBNZ to stay on hold, but some of us expect that they could open the door to future cuts in the coming meeting(s).
I have long argued on the Morning EDGE webinar that the slowdown in China has already been priced into the AUD currency, but the NZD currency has been slower to price it in. Now that China is New Zealand’s largest trading partner, I feel that this “repricing” will eventually occur, and it will be seen predominately in the AUD/NZD exchange rate.
Here is the current chart in the AUD/NZD on a weekly basis where you can see the massive trend line:
Back in January I also mentioned the bigger pattern that is developing (and becoming more symmetrical), the inverted H&S pattern:
Blake Morrow
Chief Currency Strategist, Wizetrade
Disclaimer: I have built a long position in the AUD/NZD over the last several weeks and am looking to add to my position if the pair breaks above the 1.1100 level in the coming days (on a closing basis)
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