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I spy with my big eye a potential trendline break in the works on AUD/NZD. Will the bears jump in on the setup or will the bulls take this as a dip buying opportunity?

AUD/NZD Rising Lows Break?

AUD/NZD Daily Forex Chart
AUD/NZD Daily Forex Chart

On the daily chart of AUD/NZD above, we can see the pair has been in a steady trend higher, forming a channel pattern of higher ‘highs’ and ‘lows’ over in 2021. The market is back to the rising ‘lows’ trendline, and it looks like the bulls aren’t able to defend the pattern at the moment. Is this the start of a breakdown and fresh move lower?

Well, the next potential catalysts to solidify one direction or another may come from next week’s top tier events from both Australia (Reserve Bank of Australia monetary policy statement on May 4) and New Zealand (Quarterly employment update on May 5).

Recent data from Australia has been generally positive (Australia’s unemployment drops to 1-year low), but with the latest Australian CPI coming in below expectations, I think the odds aren’t strong for an overly optimistic RBA statement.

And over in New Zealand, business sentiment data has been quite good (New Zealand Business NZ manufacturing index up from 54.2 to 63.6New Zealand service sector moves to expansion), so the odds are quite good of a rosy employment number next Thursday.

We think the employment number from NZ will be the bigger driver for the pair if the RBA doesn’t surprise on Tuesday, and if that’s the case and the NZ jobs data comes in as forecast or better, the odds are pretty good this downside break on daily may be the real deal.

That’s the scenario we’re looking out for a potential short positions, but if NZ jobs disappoints or the RBA signals the potential to pump the brakes a bit on stimulus, this rising ‘lows’ retest can quickly turn into an uptrend buying opportunity.

What do you all think?  Is this technical setup on AUD/NZD a buy or sell? Let me know in the comments section below!

This content is strictly for informational purposes only and does not constitute as investment advice. Trading any financial market involves risk. Please read our Risk Disclosure to make sure you understand the risks involved.