Buying dips offers good risk/reward in AUDNZD

The New Zealand dollar has weakened during the last couple of days compared to the Australian dollar. AUDNZD pair looks like is forming inverse head and shoulders pattern. We have been buying this pair for quite some time now, and I think we should continue to do so until bearish signs emerge.

There is an ascending trend line forming on the 4 hour chart. There are several supports on the way down for the pair. If the pair falls back a bit from current levels closer to the support zone and forms bullish divergence, then we may consider entering into a buy trade. It’s always nice to consider trading crosses ahead of major economic releases such as US Nonfarm payrolls.

Initial target should be around 1.0860 level, and final target could be around 1.0920. Stop should be placed below the 1.0650 level.

Reviewing yesterday’s events and trades
Yesterday in the NY session, US ADP Nonfarm employment report and factory orders data were published. The outcome was mostly positive as ADP employment change registered a gain of 191K jobs, and factory orders were up by 1.6%. This helped the US dollar in the short term, as USDJPY traded higher close to 104.00 level. The EURUSD, AUDUSD and NZDUSD pairs are trading lower Intraday following the release. AUDUSD is under additional pressure, as the Australia’s retail sales data published in Asian session was a bit disappointing.

Fundamental Outlook for the day
Today is an important day as European Central Bank (ECB) interest rate decisions is scheduled later in the day. The ECB is likely to keep the interest rates unchanged at 0.25%, but the focus would be on ECB President Draghi’s speech. Investors would be watching his speech closely in order to know more about disinflation risk, which can cause volatility in the market. Other than this, US ISM non-manufacturing index and US Initial Jobless claims data are also lined up later in the NY session.

This analysis is taken from today’s Daily Market Forecast, which also includes trade opportunities on: EURUSD, GBPUSD, NZDUSD, USDJPY, EURCAD, EURAUD, GBPAUD and EURCHF.
Get it HERE: Vladimir’s Markets Forecast

Trade safe friends. Happy trading!