The AUDNZD could be gearing up for a bullish reversal ahead of the upcoming RBNZ rate decision. At the moment, there’s a hint of an inverse head and shoulders pattern with the right shoulder taking shape as I type this.
Monday’s session also carved out a bullish engulfing day, which could help aid any effort to complete the pattern.
That thought brings me to an important point. With nearly 260 pips between yesterday’s close and the neckline, the structure below is far from confirmed, which means there is no setup at the moment.
But that’s also what interests me. If this were a confirmed reversal, we would have to pass on it due to the volatility that often accompanies a rate decision. As it is, we get to watch from a safe distance to see if buyers can muster a close above the 1.0765 handle.
If they fail, there’s no harm done. However, if buyers succeed to breach 1.0765 in the coming days, a move back to the March highs near 1.1300 seems likely. The 530 pip measured objective agrees with this sentiment as the final target comes in at 1.1295.
We should have a better idea of the market’s intentions by the end of Wednesday’s session.
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