The AUD and NZD are Technically Weak
It was another weak overnight session for both the AUD and NZD and looking at the charts, there could be more downside ahead.
It was another weak overnight session for both the AUD and NZD and looking at the charts, there could be more downside ahead.
I’ve been saying all week long, that the AUD/USD is looking like a being a victim of too much positive news. In a way, it was a bit of a buy the rumour sell the fact type situation.
Last week, we first saw the jobless rate drop, then RBA boss Lowe come out and ease right back on predictions for further rate cuts. This had the effect of shooting the Aussie higher, as you might expect it would. That’s because the monetary policy of the RBA has been directly tied to the jobless rate in recent times.
However, just as everyone started to get bullish, price had run right up into a big technical level in 0.6900. That is often a signal that we could get an ‘exhaustion’ type move. And so far that is exactly what we’ve seen.
With the USD firming, there is a real chance now that we will see further downside here and I would be betting on a move to 0.6800 if not today, then early next week.
The NZD/USD has made a very nice bearish chart pattern this week, with what is a nice looking double top and a drop of that key support that has been holding at 0.6400.
Again I would expect a move lower into 0.6350 here either today or early next week as well.
I particularly like the price action in the Kiwi, when we make a lower high on a test of resistance like we see here.
So for now, it is hard to say how far price eases off, but aiming for a short into those key levels as a price target would be my top trade at the moment.
These key levels suck price towards them, so that will be my trade today if there is an opportunity to manage risk accordingly.
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