Technical Analysis AUDNZD : 2019-04-19

IFCMarkets Technical Analysis
IFCMarkets Technical Analysis

Private sector expanded in Australia while inflation declined in New Zealand. Will the AUDNZD continue gaining?

Latest economic data from Australia were positive while New Zealand indicators softened. Australia’s business activity recorded an expansion in April after contraction in preceding month: Commbank Australia Composite PMI index rose to 50.6 from 49.5 in March, readings above 50.0 indicate expansion while lower readings mean contraction. And while the unemployment up-ticked to 5% in March from 4.9%, it was due to up-tick in labor force participation rate. Meanwhile Performance of Services and Manufacturing PMI indexes in New Zealand indicated slowing of expansion in both New Zealand’s services and manufacturing sectors in March. At the same time consumer inflation in the first quarter declined over the same period a year ago. Stronger Australian data and softer New Zealand indicators are bullish for AUDNZD.

AUDNZD retracing higher 04/19/2019 Technical Analysis IFC Markets chart

On the daily timeframe the AUDNZD: D1 is retracing after hitting fifteen-week low in the end of March.

  • The Parabolic indicator gives a buy signal.
  • The Donchian channel indicates uptrend: it is widening up.
  • The MACD indicator gives a bullish signal: it is above the signal line and the gap is widening.
  • The RSI oscillator is falling back from the overbought zone.

We believe the bullish momentum will continue after the price breaches above the upper boundary of Donchian channel at 1.0728. This level can be used as an entry point for placing a pending order to buy. The stop loss can be placed below the lower bound of Donchian channel at 1.0529. After placing the order, the stop loss is to be moved every day to the next fractal low, following Parabolic signals. Thus, we are changing the expected profit/loss ratio to the breakeven point. If the price meets the stop loss level (1.0529) without reaching the order (1.0728), we recommend cancelling the order: the market has undergone internal changes which were not taken into account.

Technical Analysis Summary

Position Buy
Buy stop Above 1.0728
Stop loss Below 1.0529

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