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AUDNZD Breaking Out but Daily Close Is Key

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The AUDNZD is once again surging through a key level I mentioned last Wednesday. At the time, the pair was trading near 1.0425 and still consolidating following the 400 pip drop that began in mid-May.

As we discussed last week, the consolidation since late May hinted at a move higher. The way price action has been tightening in a descending fashion suggested that sellers were running out of resources.

But the Australian dollar cross isn’t out of the woods just yet. Only a daily close (5 pm EST) above resistance would have us watching for a buying opportunity. That level appears to be 1.0510 at the time of this writing.

That leaves us with two possible outcomes. If buyers manage a daily close above 1.0510, I will begin watching for bullish price action on a retest of the area as new support. Key resistance above that would come in at 1.0615 followed by 1.0690.

On the flip side, should buyers fail to close today’s session above 1.0510, I will remain on the sideline. A close back below resistance would signal that consolidation isn’t over just yet.

The simple “if, then” logic I just applied to the AUDNZD is how I approach just about every situation. The simplest approach is often the best; that’s certainly been my experience since I began trading currencies in 2007.

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AUDNZD breakout

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8 comments
Darius says

I am trying to sell on demo account until it is not closed at 5 PM est, small amount. Huge candle up, so migth be down. Will need some trailing stops. SL at 1.05912. TP 1.0395, will try to use trailing stop to lock profit manually if will need.

I am playing with demo.

Reply
    Mimi says

    Darius, we can all see you are “playing with demo” (your own words) and completely ignoring Justin’s analysis. You will never “play” with trading if you use real money and the worst habits are created with demo accounts as you are proving with your post.

    Reply
      Darius says

      ok , not exactly now, but need to wait to drop closer to daily support I guess

      Reply
Russell Daily says

I am enjoying reading your price action trading. On the Aud/Nzd, it was consolidating with a 150 pip spread. When I see a spread that big, I look to find a reversal at the support or resistance. When the pair bounced off the 1.0400, off support and a double zero, it seemed to be a good opportunity to buy and have a reasonable stop. Do you ever consider this as a strategy.
I appreciate your Daily calls, because another pair of eyes is always good.
Thanks
Russell

Reply
    Justin Bennett says

    Russell, I assume you mean 150 pip range and not spread. I do sometimes trade ranges; it just depends on the situation.

    Reply
      Russell Daily says

      Justin, yes, poor choice of words. Range
      Thanks.

      Reply
Ted says

I’m considering putting a Limit Order to buy at 1.0515 in case I’m not around when it re-tests.

Is this a wise or foolish move?

Reply
    Justin Bennett says

    Only you can answer that. As I often ask my students, what does your trading plan say to do?

    Reply
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