AUDNZD Range Still Presenting A Strong Trade

This is our third recommendation for an AUDNZD range trade this week. The first setup played out nicely, though our restrictions on excess risk prevented us from participating in the profitable move. The second setup was stopped on a large upper wick on a false break. Through all of this though, the pair’s range has remained. Therefore, we will stick with this strong technical formation and will tailor our strategy to align our trade with the market’s direction.

Trading Tip – This is our third recommendation for an AUDNZD range trade this week. The first setup played out nicely, though our restrictions on excess risk prevented us from participating in the profitable move. The second setup was stopped on a large upper wick on a false break. Through all of this though, the pair’s range has remained. Therefore, we will stick with this strong technical formation and will tailor our strategy to align our trade with the market’s direction. Considering our range, it is clear that resistance can come at a number of different levels as volatility has pushed the ceiling on this channel a number of times. On the other hand, while highs have been bouncing higher, the range low has held consistently around 1.1325/40. As such, we will only take a long position on a test of the range low. Our entry level is somewhat higher than the extreme to account for the recent trend of higher lows. To limit risk, we will look to close out any open orders before the US GDP report and FOMC announcement as this may cause a spike in volatility for high yielding currencies.

Event Risk Australia and New Zealand

Australia – The Aussie calendar is devoid of top-tier economic event risk, but large surprises out of second-tier reports could just as easily force intraday volatility across AUD pairs. Notables on the ledger will include an NAB Business Confidence report on the 29th, followed by HIA New Home Sales on the 30th and AiG Performance of Manufacturing on the 31st. Of course, limited event risk does not mean that the AUD will remain rangebound in the days ahead. Clearly volatile markets have made for sharp price movements in the AUDNZD, and we can likely expect further volatility in upcoming trade.

New Zealand – Kiwi economic event risk is similarly devoid of top-tier economic event risk in the days ahead, but traders should watch out for surprises out of Building Permits results on the 29th and a Trade Balance release on the 30th. Both reports have shown themselves capable of forcing notable intraday volatility across NZD pairs, and recently choppy price action could potentially exacerbate moves on the economic data. That said, economic event risk will likely take a backseat to broader financial market volatility. Yet it is difficult to predict whether or not the AUD or NZD would lose more on further equity market duress.