August 15, 2009

Is The AUD/NZD About To Move Strongly Downwards?

The AUD/NZD pair (Aussie dollar against the New Zealand dollar) is starting to look interesting because it has just broken downwards through a tight trading range, as you can see from the chart below.

It moved strongly downwards yesterday to close at 1.2278 and could well signal the start of a strong downward breakout. It's now trading comfortably below it's 200 day exponential moving average and the fact that it's broken through an established trendline could encourage more sellers to jump on board.

To add weight to this forecast, the trade triangles provided by Marketclub have just triggered a sell signal on the monthly charts at 1.2249, which is always a strong indicator. In addition Marketclub's trend analysis currently puts the AUD/NZD on a -100 score (on a scale of -100 to +100) so it's basically in a maximum strength downward trend.

Of course all of this is no guarantee that the price will fall but my own personal view is that if the price could rebound slightly to say 1.2350 or 1.2400, a new short position could be a low-risk high reward trade.




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