Trade Watchlist: AUD/NZD Double Bottom

Expectations of an interest rate cut could keep pushing the Kiwi lower against its counterparts while the Aussie could stay afloat due to the RBA’s neutral stance. Here’s what I’m seeing on AUD/NZD.

AUD/NZD Trade Setup

The pair formed a double bottom on its daily time frame, signaling that price is ready to pull up from its dive. Of course AUD/NZD has yet to break past the reversal pattern’s neckline at the 1.0750 minor psychological resistance before confirming that an uptrend is underway.

AUD/NZD Daily Forex Chart

AUD/NZD Daily Forex Chart

The upcoming Australian quarterly CPI release could be a catalyst for a break higher as market watchers are expecting to see a 0.5% increase in price levels for Q3, slightly faster than the previous period’s 0.4% gain. Stronger than expected results could be enough to assure Aussie bulls that the RBA won’t be lowering interest rates in the near future.

There are no major events lined up from New Zealand this week but expectations of an interest rate cut for the next RBNZ meeting on November 10 could keep a lid on the Kiwi’s gains.

A break past the neckline resistance could take AUD/NZD up by around 400 pips, which is roughly the same height as the double bottom formation. If I’m able to hop in a long position around 1.0800, I’ll aim for the 1.1200 area with a stop just below 1.0600 for a potential 2:1 trade.

Got any comdoll trade ideas you’d like to share? Post ’em right here! And don’t forget to check out our risk disclosure when taking any of these setups.

Cheers,

Happy

See also: Q2 2016 Trading Performance Review

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  • Mark Dave Fercol

    I am also watching this one. Break’em resistance! 🙂

    • Looks like the AU CPI is serving as a strong catalyst right now. Let’s see how it goes and keep me posted if you go long!

  • Cosmin

    Why not a short in the range?
    It seems to me that the neck line holds very very well.
    And the double bottom has the right bottom lower than the first.

    • Right now, the fundamental bias seems to be favoring an upside breakout since AU CPI came in stronger than expected. Double bottoms don’t have to be perfectly at the same level anyway!

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