25 Jul 2013
AUD/NZD heading into the abyss below 1.1500 after recent central bank decisions
FXstreet.com (Barcelona) - With Australia seemingly more concerned with the Pacific region’s problems than New Zealand, the AUD/NZD cross broke through potential projected support at 1.1500 and is headed lower.
Traders betting on Australia being more reactive to China than New Zealand
While the Reserve Bank of Australia came out slightly less dovish than anticipated in their policy commentary last week, the Reserve Bank of New Zealand apparently outdid the RBA in terms of non-dovish rhetoric early Thursday. The AUD/NZD fell from approximately 1.1550 to below 1.1500 on the RBNZ rate decision and commentary. This is nothing new, though, as evidenced by the 20% decline from the March 2011 peak at 1.37936 to current levels.
Technicians say to use any oversold bounces to sell AUD/NZD
Almost any technician you ask is quick to warn of oversold bounces in AUD/NZD. However, with such a powerful multi-year downtrend in place, few are willing to “catch a falling knife” with the cross. Tim Thielen, CMT and author of The Sea Change Report, says that now that 1.1500 projected support has been violated that a move all the way down to 1.0823 is “in play” for the long-term. Thielen notes that the wisest strategy with AUD/NZD is to look to sell the cross on rallies up to identifiable resistance.
On that note, short-term resistance for AUD/NZD comes in at the 7/19 intraday low at 1.1543 and is followed by Wednesday’s peak at 1.16413. Short-term support for AUD/NZD comes in at this morning’s low of 1.1459. Below that, only Fibonacci projections are there to provide potential short-term stopping points. The next Fibonacci-based potential support comes in at 1.13742 according to Thielen.
Traders betting on Australia being more reactive to China than New Zealand
While the Reserve Bank of Australia came out slightly less dovish than anticipated in their policy commentary last week, the Reserve Bank of New Zealand apparently outdid the RBA in terms of non-dovish rhetoric early Thursday. The AUD/NZD fell from approximately 1.1550 to below 1.1500 on the RBNZ rate decision and commentary. This is nothing new, though, as evidenced by the 20% decline from the March 2011 peak at 1.37936 to current levels.
Technicians say to use any oversold bounces to sell AUD/NZD
Almost any technician you ask is quick to warn of oversold bounces in AUD/NZD. However, with such a powerful multi-year downtrend in place, few are willing to “catch a falling knife” with the cross. Tim Thielen, CMT and author of The Sea Change Report, says that now that 1.1500 projected support has been violated that a move all the way down to 1.0823 is “in play” for the long-term. Thielen notes that the wisest strategy with AUD/NZD is to look to sell the cross on rallies up to identifiable resistance.
On that note, short-term resistance for AUD/NZD comes in at the 7/19 intraday low at 1.1543 and is followed by Wednesday’s peak at 1.16413. Short-term support for AUD/NZD comes in at this morning’s low of 1.1459. Below that, only Fibonacci projections are there to provide potential short-term stopping points. The next Fibonacci-based potential support comes in at 1.13742 according to Thielen.