Start to Something Big?

  • AUDNZD long showing promise
  • Less dovish RBA triggers reversal
  • Plenty of Aussie and Kiwi data next 24 hours
  • GOLD coming into critical trend-line support

BABY STEPS - It's way too early to get excited about my AUDNZD long position, but it's also hard to ignore today's price action, showing real promise for the start to something meaningful. The other day, I highlighted the major support just below 1.0500, with the area coinciding with the January 2014 low and possible left shoulder of a major inverse head and shoulders pattern on the monthly chart. As such, this latest drop into the 1.0490-1.0500 zone made for a formidable, textbook candidate for the formation of the right shoulder of this longer-term basing pattern. And we have since seen a nice little bounce out from the area into Tuesday trade. I still would like to see a daily close back above 1.0800 on a short-term basis to really start to get excited about the trade. But for now, the price action is encouraging. Remember, I am looking for a retest of the 1.1500 area yearly high and eventual push to the 1.3000 area.

THE NEXT 24 HOURS - The catalyst for the move higher has come from the RBA rate hold, which on net, produced a less dovish than expected RBA tone. Over the next 24 hours this trade could get a good dose of additional volatility, with the GDT auction due, followed by New Zealand employment, Aussie retail sales and Aussie trade. Clearly, this type of data has the ability to make some meaningful changes to the AUDNZD rate. I am hopeful these changes will be to the Australian Dollar's benefit. Perhaps another variable that could weigh more heavily on the New Zealand Dollar going forward is the risk for another pullback in equity markets and global sentiment. The New Zealand Dollar is more correlated to risk sentiment, and as such, any capitulation on this front, would likely inspire more AUDNZD upside.

Buying a #GOLD dip could be the trade of the day. Via @joelkruger

STRATEGY - Otherwise, not much going on for me. I am waiting for stocks to come off and will also be looking to buy GOLD into another dip. There is some impressive rising trend line support around $1125, and I will happily consider taking a shot to the long side should we get down there today. I like GOLD in the current unstable market environment, making the hard metal an attractive play. It's also worth keeping an eye on USDJPY, which I believe could still see some major setbacks over the coming sessions. USDJPY continues to be very well capped below 121.75 and so long as it holds below this level, it looks like the price action can be classified as a bearish consolidation ahead of an eventual drop back towards the August lows in the 116.00 area.

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