By: John Ursus
Timeframe: W1
Recommendation: Long Position
Entry Zone: 1.0415 – 1.0565
Take Profit Zone: 1.1915 – 1.2040
Stop Loss Zone: 1.0015 – 1.0165
The AUDNZD experienced a sharp contraction over the past thirty-one trading months which took this currency pair below the signal line of its Fibonacci Retracement Fan. The AUDNZD managed to rally off of its lows and breakout above its signal line before reversing and forming a double bottom formation. The correction took this currency pair from an intra-day high of 1.3075 to an intra-day low of 1.0414 from where the AUDNZD was able to halt the sell-off and stabilize. This currency pair could face a short-covering rally amid oversold conditions.
The sell-off took the AUDNZD far below its 38.2 Fibonacci Retracement Fan, but found support by its signal line and the formation of a double bottom formation. A short-covering rally is expected to take the EURGBP back into its 38.2 Fibonacci Fan from where more upside is possible. Forex traders are advised to spread their entries over a 150 pips range between 1.0415 and 1.0565. The downward potential appears to be rather limited while the upside potential remains very attractive.
