We’ve got central bank events for both Australia and New Zealand, pushing the Aussie and Kiwi pairs straight to the top of this weeks’ crosses watch!
This week, we’ll get the latest thoughts and statements on monetary policy from both the Reserve Bank of Australia and the Reserve Bank of New Zealand. This naturally makes AUD/NZD the currency pair to likely see the mostly volatility, and right now, it’s offering the bulls a classic technical setup that could already be ready to go live before the fireworks start.
On the four hour chart above, we can see that Aussie bulls quickly took control at the end of March and pushed the pair all the way up from 1.0300 to a high around 1.0700 at the end of April. Since then, the pair has fallen back and found support around 1.0550, which is not only a minor psychological level, but also the 38% Fibonacci retracement level of that bullish swing move. If you’re still bullish after the central bank events, the pair looks like it could draw in buyers from the 1.0550 level down to the 61% Fib around 1.0450. And you may want to wait around because the stochastic is signalling potentially overbought conditions, so another pullback lower could be in the cards soon.
For those of you who are Aussie bears ahead, or after the RBA event, we’ve got this potentially bearish area setting up on the four hour chart of AUD/JPY.
On the chart above, we can see the pair gapping down lower at this week’s open, but has since bounce higher to nearly close the gap. Sellers could take back control once the gap is filled, and keep in mind that the gap does fall right on a major area of support between 77.50 – 78.00, which is another argument for it turning into resistance on a “broken support-turned-resistance” type scenario forming. The stochastic indicator is not quite showing overbought conditions at the moment, so it may pay to be patient this pair for the next few days.
And for those of you who think the RBNZ event could be a positive one for the Kiwi, this range setup on NZD/CHF might be just for you.
The pair is now testing a very strong area of support around the 0.6700 – 0.6730 levels, which drew in buyers during all three retests in April. In May, we’re seeing the area being tested one again, and we have a somewhat bullish signal that this area could draw in buyers once again. The stochastic and price action are forming a bullish divergence with lower ‘lows’ in price and higher ‘lows’ in the stochastic, potentially signalling that a reversal may be ahead. Keeping the stop tight to one daily ATR of around 40 – 50 pips and targeting the top of the range makes for a very good potential return-on-risk of over 1:1 if targeting the top of the range for a short-term position.