AUD/NZD probing a 5+ year trend line

09. March 2016 · Write a comment · Categories: EDGE Chart of the Day · Tags: , ,

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:

3-9-16AUDNZD1

Back in January I also mentioned the bigger pattern that is developing (and becoming more symmetrical), the inverted H&S pattern:

3-9-16AUDNZD2

 

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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AUD/NZD Pushes higher out of consolidation

27. January 2016 · Write a comment · Categories: EDGE Chart of the Day · Tags: , ,

The AUD/NZD broke higher today following the RBNZ’s decision to keep rates unchanged. Dovish comments about inflation look to be the culprit keeping the NZD under pressure.

Regardless, the AUD/NZD has finally broken higher out of a tight consolidation the last several months. A strong downtrend line has been taken out as a result:

1-27-16AUDNZD

Personally, I have been building a long term AUD/NZD long position the last couple months as I do belive that China’s economic slowdown has been priced more accordingly to the AUD, but not as much into the NZD over the last couple years. Since China has become New Zealand’s largest trading partner, I think that price has yet to catch up to the NZD.

Longer term I am looking at the possibility of an inverted head and shoulder development on the weekly and monthly charts:

1-27-16AUDNZD2

 

Blake Morrow

Chief Currency Strategist, Wizetrade

 

Disclaimer: I have a long position in the AUD/NZD

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AUD/NZD facing some stiff long term resistance

02. July 2015 · Write a comment · Categories: EDGE Chart of the Day · Tags:

The AUD/NZD has been on a strong run for the last several months, but the last month the flag pattern started to break out. Today, we have hit a weekly downtrend line that may pose significant resistance:

7-2-15AUDNZD1

If you look at the daily chart, the pair looks like we will post a “shooting star” reversal candle:

7-2-15AUDNZD2

I am sure at some point the AUD/NZD will break higher as the New Zealand economy continues to weaken and the RBNZ cuts rates further. I suspect the Australian economy will start to stabilize following the weakness it has felt due to the slowdown in the Chinese economy and the pace of rate cuts by the RBA may start to slow, if not stop. However, the NZD looks fairly oversold against many currencies, so we may be due for a pullback before breaking the long term down trend.

Hat Tip to @A25Forex for bringing to my attention

 

Blake Morrow

Chief Currency Strategist, Wizetrade

 

Disclaimer: I did establish an AUD/NZD short position today near current levels, and I may add to it in the coming sessions.

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AUD/NZD Poised to Challenge Long Term Trend Line

02. June 2015 · Write a comment · Categories: EDGE Chart of the Day · Tags: , ,

The AUD/NZD is poised to break higher. Not only is the downtrend line (about 1.0850) about to be challenged, but the pair has also developed a “bull flag” pattern and looks poised to move towards the 1.1450 level (also major retracement level) in the coming weeks. In addition, the recent pullback to 1.0575 was a shallow 38.2% Fibonacci retracement (not shown). Take a look at the chart below:

6-2-15AUDNZD

 

Blake Morrow

Chief Currency Strategist, Wizetrade

 

Disclaimer: I have been establishing a long AUD/NZD and will be adding to the position in the coming days.

 

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AUD/NZD showdown set for tomorrow, “High Noon”

10. June 2014 · 2 comments · Categories: Uncategorized · Tags: , ,

Well, it will be “High Noon” somewhere tomorrow, right?

The AUD/NZD is technically in breakout territory, but tomorrow is going to be a big day for the pair. Tomorrow afternoon we have the RBNZ rate decision, and a couple hours after we have the Australia employment numbers for May.

Keeping in mind, technically the pair is pointed to a move of 1.1300 (from the double bottom, retest of neckline) in the coming weeks, the combination of tomorrow’s news could set the pair off in that direction. (see chart below)

6-10-14AUDNZD

The RBNZ is expected to raise rates another .25% tomorrow 3.25%. This would be the 3rd hike in 3 meetings. The market has priced in a total of 8 hikes in the next 2 years to 4.5%. There is some skepticism that the market may have overpriced two more hikes in 2014. In the event the RBNZ leads the market to believe that they may not be as hawkish into year-end (especially with housing moderating recently) the NZD currency is at risk for a continued pullback.

Turning attention to the Australia jobs numbers a couple hours later, it must be noted that the last three employment numbers Australia has beat the expectations. I don’t see this time as any different as full time employment also seems to be swinging higher too. Labor force participation rate is ticking lower which may be a concern.

In the event that the RBNZ tones down future rate hike expectations and Australia comes in with a stronger employment picture, it could send the AUD/NZD higher and continue this massive short squeeze that had started earlier this year.

 

Blake Morrow

Chief Currency Strategist, Wizetrade

Disclaimer: I have been long the AUD/NZD since below 1.0900 and maintain my position.

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EDGE Chart of the Day 5-29-14 AUD/NZD

29. May 2014 · Write a comment · Categories: EDGE Chart of the Day · Tags:

5-29-14AUDNZD

 

The AUD/NZD broke out of its 6 month trading range today, suggesting a move to above 1.1300 in the coming weeks. 1.1330-50 represent a cluster of Fibonacci levels from the decline from late 2013 to early 2014, and also the decline from the high of 2013 to the low of 2014. 38% from the 2013 highs and 78% from the last move lower. In addition, the double bottom (or slightly higher low) and neckline break (today) suggest a move to above 1.1300 is likely and targets the cluster of Fib levels.

Buying dips to 1.0900 seems like a good long side set-up.

 

Blake Morrow

Chief Currency Strategist, Wizetrade

Disclaimer, I had established a long trade sub 1.0800 last week and have added to longs this morning.

Blake

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