This pair looks ready for another leg lower, but I’m still waiting on entry confirmation.
Do you think AUD/NZD could go for a pullback? Or will sellers push for a break lower?
As you can see from the chart above, price fell through the floor around the 1.0730 level then paused from its slide around 1.0600.
Are more sellers looking to join in soon?AUD/NZD has been consolidating for a while, forming what appears to be a bearish flag pattern. If that’s the case, a break below the latest lows could set off a slide that’s the same size as the flag mast or roughly 200 pips.
Stochastic is already heading south from the overbought zone, confirming that Aussie bears are taking control while exhausted bulls are resting.
However, there are a few catalysts on deck that could bring in more volatility for Aussie pairs. This includes the RBA decision and the Land Down Under’s quarterly GDP.
Hints that the RBA is ready to scale down its stimulus efforts could bring some gains for the Aussie, along with a potential upside surprise in its GDP report.These could spur a correction for AUD/NZD to the Fib levels marked above. In particular, sellers might be waiting for a pullback to the 61.8% retracement level that coincides with the former support at 1.0730.
There are no major reports due from New Zealand, but it’s worth noting that the RBNZ shifted to a slightly more hawkish stance in their latest policy statement.
In addition, New Zealand appears to be faring pretty well in terms of warding off more COVID-19 concerns while Australia is facing a fresh set of lockdowns in some key cities.
Either way, I’ll be on the lookout for a break below 1.0600 or a test of the 1.0730 to see if I can catch a decent short entry on this one!
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