A new wave of AUDNZD growth is within reach

06 September 2022 272 1
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The AUDNZD currency pair hit a new five-year high above 1.125 as for the end of August. Early in the week, a correction followed, and the decline has stopped. The uptrend started last autumn is still resilient. Therefore, the current correction can be seen as an opportunity to open positions with a view to resume the AUDNZD growth.


The current economic state of Australia seems to be better than the New Zealand one. This is ensured primarily by Australian trade surplus. New Zealand, in turn, has had a trade deficit since last summer, and this trend is only increasing. It is influenced by Australia's large energy supplies, which, despite the correction in recent weeks, still remain at very high price levels.


Today, the Australian dollar received certain support from the Reserve Bank, which increased the key rate by 0.5% for the fourth time in a row (at the moment, it is 2.35%). As expected, there is no substantial dynamics of AUDNZD. Concurrently, the potential for further rate hikes by the Australian regulator remains more significant compared to the Reserve Bank of New Zealand, where the key rate has already reached 3%.


Currently, the blue line of the Stochastic indicator is ready to cross the red one from bottom to top, giving a buy signal. In addition, the "morning doji star" pattern may form on the chart if the day is closed with a green candlestick. However, a strong support for the AUDNZD is slightly below, near the 1.11 level, where the uptrend line is. 


When resuming growth, the first target of the "bulls" will be to break the 1.12 level and renew the five-year highs above 1.125.



The following trading options are suggested:


1.   Buy AUDNZD in the range of 1.113-1.115. Take profit 1 - 1.12. Take profit 2 - 1.125. Stop loss - 1.11.


2.   Buy AUDNZD, if a decline to the uptrend line happens in the range of 1.11. Take profit 1 - 1.12. Take profit 2 - 1.125. Stop loss - 1.107.


Traders, at their discretion, may use Trailing stop instead of a fixed Stop loss.

This content is for informational purposes only and is not intended to be investing advice.

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Tumbler
Tumbler
07 September 2022
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