It has been almost two months since we last looked at AUDNZD. During that time, the pair was deemed unfit for trading largely due to the choppy price action that persisted below the 1.0880 handle. This is a level that has acted as support and resistance since the 1990’s, but has more recently acted as a key pivot since late 2013.
However, by the end of yesterday’s session, the pair had broken free from this consolidation while at the same time managing the highest close since December 7th of last year. More notably, the pair finished the day above the 1.0880 handle, which also intersects with former trend line resistance off of the September 2015 high.
This close puts the bulls firmly in control moving forward. That said, prices are too extended at the moment to consider a long entry. A more favorable approach from a risk/reward perspective would be to wait for a rotation back to former resistance, new support.
As for targets, the November 2015 high at 1.1085 could give buyers fits, however, the larger pattern that has been unfolding since early 2014 gives reason to believe that a retest of the 1.1300 area is in order.
The weekly chart below shows the two-year (potential) inverse head and shoulders pattern.
Of course in order to confirm the reversal, a close above 1.1430 (or thereabouts) is needed. But the immediate price structure certainly bodes well for a move back to these multi-year highs.
