Day five: potential AUD/NZD

AUD/NZD hit a high of 1.1016 yesterday, testing the year’s high of 1.1035 set in early June.

Source: Bloomberg

As detailed yesterday, I would not be chasing the price at current levels and with both the RSI and stochastic at extreme highs I would prefer to buy dips in the pair.

Yesterday’s Fibonacci levels have been invalidated due to the fact the pair made a higher high, however the 23.6% retracement of the recent rally from 1.0623 comes in at 1.0924, which could be a level we see buyers step in.

Traders who are happy to take a longer-term view on currencies would be interested to note that since 1995 whenever this pair has traded to the 1.04 – 1.05 area,  AUD/NZD has undergone a fairly sharp snapback to the 1.17 area. What’s more, if you look at AUD/NZD on a monthly chart, a close this month above the June high of 1.1036 would see the pair post a bullish outside month. This would throw weight that 1.17 could be on the cards over the coming months.

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