Published On: Tue, Feb 21st, 2017

AUDNZD uptrend developing well

InstaForex

Background


For AUDNZD the key pieces of data this week are the dairy trade auction later today and the labour price index out of Australia on Wednesday. The Governor of the Reserve Bank of Australia will also speak tomorrow. However, since the bank only released its quarterly Statement on Monetary Policy on February 10, it’s unlikely he will have much to add. 

The Reserve Bank of New Zealand also issued a policy statement in early February. The bottom line from both statements is that the policy rate will be on hold for some time, although market pricing is at 50% for the RBNZ to begin hiking in November. 

But there will be a lot of water going under the bridge before then.

In the meantime, relative commodity price movements – milk prices in the case of New Zealand and iron ore for Australia – will be the key determinants of AUDNZD.

Management and risk description


From an Elliott Wave perspective, AUDNZD is still interpreted to be in the formative stages of a broad Wave 3/ advance (refer daily and weekly charts below).

In the short term, support lies around the mid 1.0600s area and about 1.0590 max. with minor consolidation giving way to the next rally above 1.0710 toward key 1.0765 chart resistance (see daily classical chart below).

Once this key resistance is cleared, AUDNZD will complete a multi-month Inverse Head & Shoulders reversal formation, yielding an upside projection toward the 1.1295 level over the coming weeks (see daily classical chart below).

Parameters

Entry: today/tomorrow, AUDNZD is seen as a buy at about 1.0680 and again on any dip to around 1.0645 (only until 1.0710 resistance is cleared).

Stop: just under 1.0575, initially.

Target: 50% at 1.0753 and 50% at 1.1118.

Time horizon: allow several weeks at least, for both targets to be met.

AUDNZD daily Elliott Wave (click to expand)

 Source: ThomsonReuters  

AUDNZD daily Classical (click to expand)

Source: ThomsonReuters  

AUDNZD weekly (click to expand)

Source: ThomsonReuters. Create your own charts with SaxoTrader; click here to learn more

– Edited by Gayle Bryant

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