I’ve mentioned the AUDNZD twice in April. The first was when the pair was carving out a bull flag and the second just after it had dipped below the 1.0765 key support level.
However, the Aussie cross never set up for us as 1.0765 gave out before an opportunity could materialize. But despite last week’s dip, buyers reclaimed 1.0765 at the end of yesterday’s session.
I mentioned the selloff that began on April 18th on Twitter. Even as sellers took out channel support near 1.0710, I commented that it looked like a bear trap. Something about the way the pair was moving didn’t feel right given the run-up in February and early March.
The April 20th bullish engulfing candle followed by yesterday’s close support my suspicion. There were obviously a large number of stops below 1.0750 that needed to be cleared before the next leg up could materialize.
From here any retest of the 1.0765 area will likely encounter buying pressure. Key resistance comes in at 1.0832 with channel resistance just above that being the gatekeeper to much higher levels.
My longer term target for the pair remains last year’s highs near 1.1300. I’ll discuss additional levels on the way up if and when the bulls clear channel resistance on a daily closing basis.
One reason I like the AUDNZD, apart from the more than favorable long-term objective, is its insulation from the France elections. We just witnessed how disruptive weekend volatility can be, and the event is far from over. The AUDNZD provides a degree of protection from such shocks.
The most notable event that could affect the pair in the next 48 hours is Australia CPI on Tuesday at 9:30 pm EST.
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