The AUDNZD has corrected sharply as visible in this H4 chart, but managed to form a double bottom. The minor rally from the first low was halted by its declining resistance level which is enforced by its descending 50 DMA. This currency pair has now retraced its bounce and we expect it rally from here and attempt a breakout which may open up a rally back to 1.2400 which would be around its 200 DMA.
MACD has shown improvement in momentum and we expect the next rally to perform a bullish centerline crossover which should further fuel the rally. RSI has improved as well and currently trades in oversold territory as it flirts with a breakout of its current condition which should initiate the rally.
We recommend a long position at 1.2180 with a potential second entry at 1.2000. We also advise traders to place a stop sell order at 1.2100.
Traders who wish to exit this trade at a loss are advised to place their stop loss order at 1.2100. We will not use a stop loss level for this trade and execute it as recommended. Place your take profit level at 1.2380.
Here is why we call the AUDNZD currency pair higher
- AUDNZD formed a double bottom formation and we expect this currency pair to attempt a breakout
- MACD has shown that momentum has improved drastically and we expect a bullish centerline crossover
- RSI has improved as well and currently trades in oversold territory while it flirts with a breakout
- Australia will not cut interest rates during the next three to six months as some suggested which caused the sell-off
- Australia is in better economic shape than New Zealand, especially during the pending global recession
- Short covering rally