Keeping it simple in this week’s crosses watch with basic support & resistance setups on AUD/NZD, GBP/AUD and CAD/CHF!
First up is AUD/NZD that recently saw a burst of volatility thanks to a big surprise from the RBNZ last week with a bigger-than-expected interest rate cut. The pair has been in a steady downtrend since early April and recently made new lows just below the 1.0300 handle before the RBNZ brought in Kiwi sellers with force.
AUD/NZD is now retesting a minor area of interest in which the market traded around through June and July before the pair broke lower to resume the downtrend. The question now is this where sellers take back control? Or is this where AUD/NZD begins its bull run now that interest rates are even between the two countries, and the RBNZ the expectations for more cuts, maybe even negative interest rates? No one knows, but we could get a breakout in either direction this week with Aussie jobs ahead as well as some Chinese data on the calendar.
Australia isn’t the only one sharing potentially market moving jobs data this week; the U.K. is set to move markets with its own employment update on Wednesday. This makes GBP/AUD the pair with the highest probability of economic related volatility this week, so it definitely is one to watch.
Volatility actually has picked up on this pair throughout July, understandable given the U.S.-China trade war and the Brexit-related drama from the U.K. But price action has choppy, giving only short-term traders the opportunity to grab pips in the past month. That still might be the case with a somewhat defined range between 1.7600 – 1.8000. A retest of those highs and lows should be on your watchlist this week as the employment updates should easily get the markets to those areas for fresh range play opportunities.
Last but not least, we’re revisiting the price action on CAD/CHF as we pointed out last week the pair was retesting a major support level around 0.7375. Well, it looks like that major support level broke and traded lower to around 0.7270 before the momentum ran out of steam and the pair bounce higher.
But the bear were ready and waiting around the broken support area, and with the pair back on the move lower, this could be the start of a fresh leg lower for CAD/CHF. And if that’s the case, the next target level should be the December 2018 lows around 0.7180 for a nice potential return-on-risk if using the daily ATR of around 55 – 60 pips as a stop setting guide.