Looks like I’m getting that pullback I’ve been waiting for! AUD/NZD is making a correction to the 1.0500 area of interest so I’m considering adding to my short position. If you’re wondering what I’m referring to, better review my initial AUD/NZD short trade idea here.
I’ve already hopped in a small short position at market (1.0475) but I did mention I was still holding out for a quick pullback to the area of interest for a better short entry price. Zooming in to the 1-hour chart, I noticed that price is also moving below a descending trend line, which lines up with the 61.8% Fibonacci retracement level.
AUD/NZD Trade Idea
Earlier today, New Zealand reported a 6.6% gain in dairy prices during its latest GDT auction, reassuring Kiwi bulls that the industry is doing well. Soon after, the ANZ commodity prices report printed a 2.0% gain for July, following the 3.7% increase back in June and suggesting that inflationary pressures are still present.
In China, the Caixin services PMI tumbled from 52.7 to 51.7 in July, possibly putting a drag on demand for Australia’s exports to its top trade buddy. Australia has yet to print its retail sales report in the next Asian session and based on the recent releases from the Land Down Under, the odds seem skewed towards a downside surprise.
I’m already in with a small 0.25% risk below the 1.0500 mark and still waiting for stochastic to turn lower before adding another 0.25% position around these 1.0550 levels. I’ll keep you posted on my trade decisions through my Twitter account but for now, don’t forget to read our risk disclosure if you’re thinking of joining me!
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