AUDNZD: Pullback after 1.1500 missed reveals support line of less bullish channel helped to curtail drop and now potentially reverse it
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 1.1111 around time of publication.
Last time this pair was reviewed in Ideas You Can Trade at the end of last month - the trend was approaching 1.13 where a break-above that price was forecast as very bullish - and a failure to break that price was forecast as bearish.
Since then the pair initially failed to hit 1.1300 and indeed pulled-back to 1.1150 where support was found on a long term bullish line (point 8 on chart below in green). After that support was found - momentum gained and lifted the pair past 1.1300 and AUDNZD briefly pierced 1.1400 on July 2nd before falling back towards current prices.
In the last 5 days since building support above 1.1000, it appears that the subsequent higher lows coincide with the slope of the lower support line of the potential bullish channel drawn in the last post (white channel on chart below)- which could help bring the pair higher again.
If this support line of the newly emerged bullish channel holds - then a higher-high should follow, whereas if the support line of this channel fails then the pair could dive steeply towards 1.08 and resume its pullback. In addition, if the longer term bullish support line mentioned above is regained - this could aid a bullish continuation.
Below are examples of how to trade a bullish continuation or a bearish reversal:
1. BULLISH BUY ENTRY ORDER: Create a “Buy Entry Stop” @ 1.1156 with a Limit to take profit @ 1.1220 and a stop-loss @ 1.1093 Risk/Reward Summary: Limit risk = +64 pips profit / (-63) Stop-loss risk = Gain to Loss ratio = 1.01
2. BEARISH SELL ENTRY ORDER: Create a “Sell Entry Stop” @ 1.1048 with a Limit to take profit @ 1.0997 and a stop-loss @ 1.1099 Risk/Reward Summary: Limit risk = +51 pips profit / (-51) Stop-loss risk = Gain to Loss Ratio = 1.00
Medium term daily candle chart: