AUDNZD: Very steep bullish trend since parity was reached brings pair to converging resistance under 1.13 today
The medium term chart below shows the Australian Dollar (AUD) versus the New Zealand Dollar (NZD). This currency pair is known as AUDNZD and is trading near 1.1283 around time of publication and just off the current session high of 1.1294.
Last time this pair was reviewed in Ideas You Can Trade was in February this year when the AUDNZD was approaching parity - and a bearish continuation was expected. Since then parity was reached - after some range-bound trading followed- and then the pair has subsequently recovered strongly up a very-steep bullish trend line. Since parity AUDNZD is up nearly 13% in the last few months since barely reaching 1.0000, and has enjoyed a very strong bullish run in that short period of time.
Today the pair is testing higher again - but hit under a resistance level coinciding at 1.1300 that consists of horizontal resistance - at that price (1.13 had previously reversed a bull run in October 2014 and was mentioned in the last post about this pair). In addition, the AUDNZD is also near the upper resistance line of a converging bullish channel that is less-steep than the current bullish trend (see white channel on chart below).
If resistance holds under 1.1300 the pair could dive back into the less-steep bullish channel, whereas a break-above 1.1300 should be very bullish.
Below are examples of how to trade a bearish continuation or a bullish reversal:
1. BULLISH BUY ENTRY ORDER: Create a “Buy Entry Stop” @ 1.1305 with a Limit to take profit @ 1.1370 and a stop-loss @ 1.1255 Risk/Reward Summary: Limit risk = +65 pips profit / (-50) Stop-loss risk = Gain to Loss ratio = 1.30
2. BEARISH SELL ENTRY ORDER: Create a “Sell Entry Stop” @ 1.1223 with a Limit to take profit @ 1.1186 and a stop-loss @ 1.1260 Risk/Reward Summary: Limit risk = +37 pips profit / (-37) Stop-loss risk = Gain to Loss Ratio = 1.00
Medium term daily candle chart:
Longer-term weekly candle chart: