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XTB TRADEBEAT

AUD and NZD pare Tuesday’s gains

Summary:

  • AUD and NZD are both trading lower today
  • Yesterday’s session saw large jumps higher for the Anitpodeans
  • Is NZDUSD set to resume its downtrend?

Tuesday saw huge gains in both the Australian dollar and New Zealand dollar and whilst a case for some appreciation revolving around the RBA rate decision for AUD and the higher GDT auction results for the NZD the timing of the move suggested that these positive developments were far from the main drivers.

Today has seen seem paring of these gains and the question now is whether yesterday’s trade marked a significant new move for these currencies or whether it was an erratic outlier.

Let’s first begin with the AUDUSD.

The pair surged higher by some 80+ pips during yesterday’s trade before pulling off the highs into the end of the day. Price came close to taking out the 2017 highs of 0.8064 seen at the end of July and you have to go back more than two years to find a higher price being traded. Should price fail to move above 0.8064 then a reversal could be on the cards with a possible double top forming. A close back below Tuesday’s low of 0.7941 would see a rising trendline from the lows seen back in early June tested and should this giveway then a pullback may be on the cards.

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 There could be a possible double top forming on the AUDUSD. A break below 0.7941 and the rising trendline from early June may provide an opportunity for a pullback. Source: xStation

Now, let’s turn our attention to the NZDUSD.

This pair has been quite different to the AUDUSD of late with a clear shorter term downtrend in place since the end of July. A longer term head and shoulders pattern may be playing out, but if we look at the last 6 weeks price action it is noticeable that the 8 and 21 EMAs on D1 have defined a downtrend. Tuesday’s spike higher saw price briefly pop above the 21 day EMA (yellow line) but price faded and closed back below it. Today has seen some further downside and should price drop much more then the downtrend may be set to resume. Watch out for recent lows of 0.7132 for possible support whilst weekly highs around 0.7260 could offer some resistance.

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 The NZDUSD has been in a downtrend and Tuesday’s rally saw price retest the 21 EMA on D1. Source: xStation

Shorter time frames can look more closely at the recent moves and laying a fibonacci retracement over Tuesday’s rally reveals that more than 50% of the gains have now been handed back. 61.8% and 78.6% retracements at 0.7198 and 0.7180 respectively could be worth keeping an eye on but should these fail to attract buyers if tested then we could be set for a continuation of the longer term downtrend.  

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 NZDUSD has handed back more than half of yesterday’s gains. Source: xStation

 

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