Hi Traders! AUDNZD short term forecast update and follow up is here. On January 18th 2023 I shared this “AUDNZD Short Term Forecast And Technical Analysis” post in our blog. In this post, let’s do a recap of this setup and see how it has developed now. If you would like to learn more about the way we trade and the technical analysis we use then check out the Home Trader Club. Spoiler alert – free memberships are available!
My Idea
On the H4 chart, the price reached a key resistance zone that has formed based on the 100%(1.09182) Fibonacci expansion level of the first wave and the 61.8%(1.09536) Fibonacci expansion level of the second wave. The price respected this zone and is currently moving lower. Also, we have a bearish divergence that has formed between the first high formed at 1.08788 and the second high formed at 1.09374 based on the MACD indicator which we may consider as evidence of bearish pressure. In addition to this, the ADX indicator gave a bearish signal here at the cross of -DI (red line) versus +DI (green line) and the main signal line (silver line) reads value over 25 which we may consider as yet another evidence of bearish pressure. So everything looks good here for the bears and until the key resistance zone (marked in red) shown in the image below holds my short-term view remains bearish here. A valid breakout below the last low at 1.07980 would be the validation for this bearish view.
AUDNZD H4(4 Hours) Chart Current Scenario
Based on the above-mentioned analysis my short-term view was bearish here and I mentioned that until the key resistance zone holds I expect the price to move lower further. Also, I mentioned that “a valid breakout below the last low at 1.07980 would be the validation for this bearish view”. The price action didn’t follow my analysis here and this idea failed. The validation for the bearish view which is a valid breakout below the low at 1.07980 happened as per the plan. In addition to this, the price created lower lows based on the MACD indicator. We already had a bearish divergence which is followed by lower lows thus creating a bearish convergence, which is a good sign favouring the bears. Generally, after a bearish convergence, we may expect pullbacks and then a further continuation lower. The price alternately moved higher further, broke above the key resistance zone, and is currently holding above it, thus invalidating this bearish view. My current view on AUDNZD is neutral.
So traders, this is why I wanted to show this example to help you understand why we should always trade based on the facts and hints provided by the market and take the right actions according to that. Even though we had facts supporting the bearish view here, the price moved higher, broke above the invalidation level and is holding above it which we may consider as a fact provided by the market opposing this bearish view. Also, you should keep in mind that losses are part of trading we can’t expect every trade to go as per our plan and provide us with profits. In trading, we can’t avoid losses but in order to be successful in trading, we should know how to cut losses early and how to manage the trade when the price goes in the opposite direction.
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Arvinth Akash
Home Trader Club Team.
