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No fresh plays to head into June, but the downtrend in AUD/NZD looks ripe for a bounce so I had to throw it on the watchlist. Will an opportunity to come at a better price?

AUD/NZD Downtrend Pullback

AUD/NZD 4-Hour Forex Chart
AUD/NZD 4-Hour Forex Chart

From a technical perspective, AUD/NZD made a pretty sweet downside move in the second half of May, moving almost straight down over 300 pips from 1.0800 to 1.0500. This is roughly two times its weekly ATR and using the Fibonacci extension tool, it’s also at the 100% Fib extension level of its last swing move. Finally, the stochastic has already reached the oversold area and rising higher as prices fell, creating a quasi-bullish divergence signal.

Fundamentally, I think a driver for a bounce will be the slew of Australian economic data this week, most of which are projected to come in better-than-previous reads. Most notable is the Australian Retail Sales report this week, expected to rise by 0.3% vs. a decline of -0.1% previous.

The potential is there for sellers to hop in the momentum lower at a better price, especially if it can get up to the broken support around 1.0600 to 1.0650. I think sellers would be enticed to hop back in there, but I think I’ll wait to see what data says first before putting in new orders.

So, be on the lookout for a new trade idea if we do see a retest, and until then as always, remember to never risk more than 1% of a trading account on any single trade. Adjust position sizes accordingly. Create your own ideas and don’t simply follow what I do.

Risk Disclosure
Pipcrawler’s Q1 2017 Blog Trading Performance

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