I spy with my one good eye this neat range on AUD/NZD’s long-term time frames! Price just bounced off support and seems to be aiming for the top, but it could encounter a nearby ceiling.
Short AUD/NZD Setup
On the pair’s daily time frame, it can be seen that price has found support around 1.0325 and might be due for a test of the range resistance at 1.0725. Stochastic is heading up, which means that buyers are on top of their game at the moment and could push for more gains.
However, the oscillator is also approaching the overbought zone and turning lower could draw sellers back to the mix. With that, the nearby area of interest at the middle of the range and the 1.0550 minor psychological level could keep gains in check.
When it comes to fundamentals, both the Aussie and Kiwi seem to be on the weak end of the spectrum as concerns of a slowdown in China could dampen demand for commodity exports. Data from Australia has been mostly disappointing, with growth, inflation, and consumer spending reports all printing weaker than expected results. On the other hand, New Zealand reported a stronger than expected Q3 GDP reading and the RBNZ’s higher interest rate could attract more carry trades.
I haven’t set actual entry orders yet since I plan to watch how price reacts to the 1.0550 area. Reversal candlesticks and overbought stochastic could convince me to short at that area while long green candles might signal that it’s better to wait for a test of the higher range resistance.
As always, don’t risk more than 1% of your account on a single trade and make sure you read our risk disclosure if you’re thinking of taking the same setups.
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