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  • AUD/NZD has the scope for a fresh bearish impulse and lower low.
  • Bears would ideally like to see a deeper correction to trigger a sell limit order.

This is a developing story.

AUD/NZD is offering a classic 1,2, 3 setup as the correction of wave 1 is faded to offer the scope of a fresh bearish impulse and lower low.

The following charts illustrate the price action of the opportunity of placing a sell limit above the market in anticipation of a 38.2% Fibonacci retracement 

1D chart

As can be seen on the daily chart, the price is already in the process of what could be a downside extension in the 1,2,3 wave pattern.

The correction, or wave 2, is quite deep, so this is a higher risk setup which means that trader might wish to reduce the risk for which is usually traded. 

However, there is favourable positioning that could support the kiwi according to the latest CFTC data. 

4HR chart

In the four-hour chart, the setup is illustrated.

While the price, according to the above chart, has already made a 38.2% retracement, we want to see a firmer test of the resistance.

A sell limit has been placed with a stop loss above a 78.6% retracement of the recent bearish impulse.

Targetting the 1.0781s offers a 1:3 risk to reward ratio. 

The price action will be monitored from a four-hour perspective for the fill.

Once there is a fill, the first objective will be to manage risk and seek out new resistance structure above the price to move the stop loss to breakeven.

More to come…