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This pair has been on a tear since the middle of this year and looks prime for a pullback opportunity. Time for me to catch this uptrend!

Long AUD/NZD Idea

AUD/NZD has been moving above an ascending trend line connecting the lows for the past few weeks. Scrolling further back shows that this rising support level has been intact since the pair’s bounce off the long-term floor at 1.0400 in June.

I’m seeing a chance to hop in the uptrend with this ongoing correction to the trend line and 61.8% Fibonacci retracement level near the 1.1000 major psychological level. I’m setting my buy limit order slightly higher at 1.1025 in case Aussie bulls are eager to hop in and push price past the latest swing high.

AUD/NZD 4-hour Forex Chart
AUD/NZD 4-hour Forex Chart

Stochastic is still on the move down so there may be a bigger dip in play. I’m setting my stop below the swing low and the 1.0900 major psychological support to give the trade some leeway.

Besides, Aussie bulls might be a bit hesitant to charge for now since the RBA just warned that further currency strength could make it more challenging for the economy to achieve stronger inflation and growth. Meanwhile, the Kiwi has gotten a fresh boost from a 0.3% rebound in dairy prices during the latest GDT auction.

Looking ahead, I think the Aussie could be able to resume its climb since gold and iron ore remain supported. The Kiwi, on the other hand, could be most vulnerable to risk-off flows stemming from escalating threats from North Korea.

I’m still gonna keep close tabs on Australia’s upcoming reports, particularly the GDP and trade balance as these could determine whether or not hawkish expectations might remain in play for the RBA. If the figures disappoint, I’ll be ready to close my long position early.

Here’s what I’m looking at:

Long AUD/NZD at 1.1025, stop loss at 1.0875, initial profit target at 1.1175. I’ll be risking 0.5% of my account for a potential 1:1 return-on-risk. What do you guys think?



See also: Q2 2017 Trading Performance Review

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