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AUDNZD Breaks Two-Month Consolidation Pattern

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Thanks to the recent RBNZ rate cut, AUDNZD managed to break free from a two-month consolidation pattern during yesterday’s session. I mentioned this pattern last week while the pair was still churning below trend line resistance off of the July 2nd high.

AUDNZD bullish pin barNow that the pair is above this level, it’s time to start watching for buying opportunities. One such opportunity materialized recently on the 4 hour chart in the form of a bullish pin bar.

Those who missed out can continue to watch for an opportunity as the bullish momentum gathers pace; perhaps on a break above yesterday’s high at 1.1264.

That said, it is Friday so waiting until next week may not be a bad idea to avoid any news over the weekend that could adversely affect the pair.

One idea for those who missed the pin bar mentioned above is to wait to see if today’s session ends as an inside bar. If it does, then the idea of waiting for a break of yesterday’s high takes on a whole new meaning.

My preference is to wait it out to see how today’s session ends before further consideration. I don’t want to enter on a Friday and I’d like to see some consolidation above the new support level before thinking about putting on a position next week.

As for targets, the August 24th spike lines up well with the June 2nd high, signaling that the 1.1420 level is one to watch. A break there would expose the 1.1720 handle, which is the measured objective if we use the height of the wedge pattern to project a target.

Note: There is a chance that the trend line below could be a bit higher based on some of the upper wicks of late. However if the price action on the 4 hour chart is any indication, the area represented below is now well bid.

Summary: Watch for a buying opportunity while above former wedge resistance. Key resistance comes in at 1.1420 and 1.1720. Alternatively, a daily close back below the former resistance level would negate the bullish bias and indicate that further losses are likely.

AUDNZD break of bullish wedge pattern on the daily chart

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