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Forex: Ideas You Can Trade- AUDNZD Nearing Long Term Bearish Support

Posted by Steven Hatzakis on Nov 7, 2013 3:12:00 PM

AUDNZD:  Bearish Trend Gaining Momentum as Long Term Bearish Support Line Approaches

The medium term chart below shows the Australian Dollar (AUD) versus the New Zealand Dollar (NZD). This currency pair is known by the symbol AUDNZD and is currently trading near 1.1363 (as of publication) after just snapping back from session lows of 1.1308 - following a drop from 1.1370 where the pair opened earlier -as volatility in the cross continues.

Seven of the last ten trading sessions have closed lower as the pair descended under a very short term bearish resistance line (point 4 in yellow on chart) and in the last three days, AUDNZD has been struggling to hold onto a short term bullish support line (point 3). Since the last time the pair was covered in the Ideas You Can Trade series, not much has changed with regards to the overall essence of the trend, over the medium term.

The failure to hold along this support line as indicated by the lower price action of today’s trading points towards further bearish momentum for the pair over the very short term. If this happens, the long term bearish support line (point  2 in dark red) may provide ample support to reversal the downward momentum and if this failed further support would be closer towards 1.1050  near a long term bullish support line (point 8 in dark green).

If the support line that has failed to hold today can be regained, a very short term bullish continuation line could develop (such as point 7 in green)  and pro viding a path towards the upper line of the medium term bearish channel (point 1 in magenta).

 Below are examples of how to trade a bearish continuation or a bullish reversal:

1.  BULLISH BUY ENTRY ORDER: Create a “Buy Entry Stop” @ 1.1381 with a Limit to take profit @ 1.1409 and a stop-loss @ 1.1363  Risk/Reward Summary: Limit risk = +28 pips profit / (-18) Stop-loss risk = Gain to Loss ratio =  2.15

2.  BEARISH SELL ENTRY ORDER: Create a “Sell Entry Stop” @ 1.1298 with a Limit to take profit @ 1.1249 and a stop-loss @ 1.1321 Risk/Reward Summary:   Limit risk = +49 pips profit / (-23) Stop-loss risk = Gain to Loss Ratio =   2.13

 Medium term daily candle chart:

 audnzddaily nov 7 2013 note



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