AUD/NZD Price Analysis: posting a Bullish Wedge pattern
AUD/NZD price analysis: although the medium-term bias is bearish, the wedge formation offers an immediate upward bias in a counter trend trade
Market highlights from the last week
Thursday 16 July: risk appetite was cautious with measured net losses for US equities, but Asian stocks posted slight gains.
Friday 17 July: new US coronavirus cases continued to increase with the total death toll increasing to above 140,000
Monday 20 July: US equities posted significant gains with a strong Nasdaq advance to fresh record highs
Tuesday 21 July: sentiment was slightly more fragile in Asia on Wednesday amid US coronavirus and fiscal uncertainties.
Wednesday 22 July: risk appetite was jolted by a further increase in US-China tensions.
AUD/NZD price analysis
Let us have a look at the technical viewpoint:
Monthly: traded to a multi-year low of 0.9991 in March. April and May posted net gains with July’s price action leaving an indecisive Doji Style candle at the high
Weekly: previous resistance located at 1.0865. Selling from 1.0881 resulted in all the initial weekly gains being sold into. Mixed trading for the last nine weeks. The previous swing low is located at 1.0188 (week 31 December 2018). With this being close to the 78.6% pullback level of 1.0181 (from 0.9991 – 1.0881), we look for this to be a substantial medium-term support area.
Daily: Strong buying pressure on the 14 and 21 July. Yesterday’s mild selloff was inside the 21 range (1.0754-1.0659). We have broken the Ichimoku Cloud formation to the upside. This now offers support at 1.0693
What is your sentiment on AUD/NZD?
Intraday one-hour: forming a bullish wedge pattern. A break of 1.0714 and the measured move target is 1.0745. We have a 61.8% pullback level at 1.0688 (from 1.0648-1.0754)
Outlook: although the medium-term bias is bearish, the wedge formation offers an immediate upward bias in a counter trend trade
Possible trade setup (this week only):
Action: buying at the market (1.0695)
Stop: 1.0680 (below 61.8%)
Potential return on risk to first target: R3.3 (reward 50 / risk 15)
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