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The bullish wedge on AUD/NZD continues to play out nicely, having reached a 10-week high as of yesterday. But the trend may be in need of a pause, before further gains materialise.
If successful, the bullish wedge targets the 106.37 highs. Whilst some may prefer not to label it a wedge due to the prominent spike form the flash-crash low, given the abnormal spike occurred during low liquidity conditions at the blink of the eye, I feel inclined to look past it where this pattern is concerned. Either way, prices have compressed as they retreated lower before its prominent break higher, so we continue to track AUD/NZD’s potential to reach for the 1.0760 highs in due course.
The structure remains encouragingly bullish, although a pullback could be due, following yesterday’s exhaustion candle at the highs. The bearish pinbar was extended above its upper Keltner band and today’s prices have broken its low to confirm the short-term reversal candle. At time of writing, it hovers around the Feb high (1.0545) although a dip beneath here is no major threat to the bullish bias. In fact, from current levels we’d welcome a retracement as it could provide an opportunity to enter long at a more favourable price.
Counter-trend traders could look fade the move and target a Fibonacci ratio and / or the 20-day average. Trend traders would likely prefer to step aside and wait for prices to consolidate above such levels of support before considering whether they’d want to buy the dip.
Keep in mind that RBA’s Assistant Governor, Guy Debelle is due to speak shortly. Perhaps a dovish tone could help provide a break of key support and continue to pile pressure on AUD/JPY.
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