Potential trade idea: buying AUD/NZD

I looked at buying dips in AUD/NZD on April 3 at 1.0750, on the back of the break of the inverse head and shoulders on April 2.

It was certainly bullish that AUD/NZD came back, tested this former neckline and subsequently rejected this level. In my prior article I suggested the technical target was 1.0930, however I have taken profit today at 1.0840, as there is divergence seen on the daily chart between the 9-day RSI and price.

On April 10 we saw a bullish reversal pattern, with the pair trading below the prior day’s low and closing convincingly above the prior day’s high. This suggests the bulls are currently in control.

For those looking to stay in the trade, I would look at potentially raising stops on the trade to 1.0720, just under the April 10 low and 38.2% retracement of the march to April rally. It’s worth highlighting that there is strong horizontal resistance between 1.0891 and 1.0920 and on a break of this level and I would look to re-enter longs. 

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