AUD/NZD price analysis: stalls close to 261.8% extension

AUD/NZD price analysis: overbought extremes and a 261.8% extension possibly highlights a temporary top. Selling into rallies offers a sound set up

AUD/NZD price analysis                                 

Market highlights from the last week

Monday 1 June: The Reserve Bank of Australia held interest rates at 0.25% following the latest policy meeting, in line with market expectations

Tuesday 2 June: Australian data beat market expectations with AUD/USD at 5-month highs before a correction

Wednesday 3 June: The Australian dollar was subjected to a correction, but selling pressure was limited

Thursday 4 June: Commodity currencies were again supported by US dollar weakness with AUD/USD again testing key resistance

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. 

Weekly: Previous resistance located at 1.0865. Selling from 1.0881 resulted in all the initial weekly gains being sold into.  The cross has posted an Inverted Hammer, often seen at the top of a trend and the start of a new downward bias.

Daily: We have a 261.8% extension level located at 1.0932 (from 0.9991-1.0300). This looks to have completed a bullish 5-wave count (Elliott Wave). We could be forming a bullish reverse Head and Shoulders pattern with support located at 1.0283

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Intraday 4-hour: Previous support located at 1.0662. There is scope for a correction higher from this important level. 

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Outlook: Overbought extremes and a 261.8% extension possibly highlights a temporary top. Selling into rallies offers a sound counter trend reward against risk set up

Possible trade setup: 

Action: Selling at 1.0820

Stop: 1.0900

Target: 1.0670

Potential return on risk to first target:  R2.6 (reward 150 / risk 80)

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Australian Dollar / New Zealand Dollar
Daily change
1.05836
Low: 1.05836
High: 1.06211
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