AUDNZD: Playing The Range
Submitted by Nic Lenoir of ICAP
As volumes are abysmal this week, we continue to think the risk
is for lower US Treasury prices as supply chokes the market in low
volume/appetite on this holiday week. Equities keep grinding higher and
are getting awfully close to resistance levels, with ever lower volumes
"supporting" the price action.
an environment and assuming you are not short US Treasuries from 2
weeks ago, we recommend sticking to more benign and lower beta trades.
AUDNZD has been consolidating sideways ever since testing support
around 1.2450, and we tested and rejected overnight the resistance of
the consolidation channel at 1.2550 (see intraday chart). We remain
under the multi-year resistance we rejected recently at 1.28, and one
should expect we will either further consolidate in the daily channel
(see daily chart) between 1.1950 and 1.2850, with the next move being
to test support around 1.1950/1.20, or go back test the support of the
multi-year triangle between 1.05 and 1.10. Either way it appears the
medium term direction is to play the downside. Either sell 1.2550 or a
break of 1.24 with a stop above 1.2650, and a target of 1.20.
is another trade we have discussed in the past. Our view remain that
the market should rally past 0.95 in the medium term and we recommend
buying in the 0.8920/0.8980 zone to build up long positions. We would
stop on a daily close below the daily channel (approximately 0.88) and
add on a break of 0.9150.
Good luck trading,