As expected, the RBA cut interest rates by 0.25% in today’s policy decision, sending the Aussie lower against its peers. Can AUD/NZD reach my target levels next?
On the pair’s daily time frame below, it can be seen that price has slumped back below the area of interest at the 1.0500 major psychological level. This could mean that there’s enough bearish momentum to take it all the way down to the bottom of that range around the 1.0300 mark while stochastic is heading south.
Stronger selling pressure could even take it down to last year’s lows closer to parity, but all that could depend on how many more rate cuts the RBA has up its sleeve and whether or not the RBNZ might join the easing bandwagon as well. So far, data from New Zealand hasn’t been too bad and the Kiwi has been taking advantage of the positive carry against its other forex rivals.
I’ve already shorted at market after the RBA announcement but I only risked 0.25% of my account on this nibbler position with a stop equivalent to the pair’s weekly ATR of 200 pips. I’m open to adding another small short position on a pullback to the 1.0500 area or if price makes a strong break below the 1.0300 support. Once the pair reaches that floor, though, I’ll be ready to move my stop to entry.
Here’s what I have:
Shorted AUD/NZD at market (1.0475), stop loss at 1.0675, PT at 1.0025. I’ve risked 0.25% of my account on this position but I’m open to adding another 0.25% risk on a pullback or strong breakdown.
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