AUD/NZD: Opportunity to Buy?

I am really bullish AUD/NZD and believe that this may be a good opportunity to scale into a long position. The currency pair has been rallying for 7 days straight and is finally retracing. It is in the buy zone, which I determine using Bollinger Bands. Fundamentally, the RBA left interest rates unchanged Monday evening and even though data overnight was weak, the Australian dollar continues to rally as the central bank talks up the economy and the currency.

However the big reason why I am bullish the currency pair is because New Zealand has a rate decision next Wed and they are expected to cut interest rates by 75bp!!! Even if the RBNZ cuts by 50bp, that is already more bearish for the NZD relative to the AUD.

As long as AUD/NZD holds above 1.2650, I expect a move to 1.30 and if that is cleared as well, the next area of resistance is the 2000 high of 1.3629.

Graph 1

Image: eSignal

About Kathy Lien 236 Articles

Kathy Lien is an Internationally Published Author and Chief Strategist of, one of the world’s most popular online websites for currency research. Her trading books include the highly acclaimed, Day Trading the Currency Market: Technical and Fundamental Strategies to Profit form Market Swings (2005, Wiley); High Probability Trading Setups for the Currency Market E-Book (2006, Investopedia); and Millionaire Traders: How Everyday People Are Beating Wall Street at Its Own Game (2007, Wiley). As Chief Currency Strategist at FXCM, Kathy is responsible for providing research and analysis for DailyFX, the research arm of FXCM. She also co-edits the BK Forex Advisor, an Premium Service with Boris Schlossberg – one of the few investment advisory letters focusing strictly on the 2 Trillion/day FX market.

Kathy is also one of the authors of Investopedia’s Forex Education section and has written for, the Asia Times Online, Stocks & Commodities Magazine, MarketWatch, ActiveTrader Magazine, Currency Trader, Futures Magazine and SFO. She is frequently quoted by Bloomberg, Reuters, the Wall street Journal, and the International Herald Tribune and has appeared on CNN, CNBC, CBS and Bloomberg Radio. She has also hosted trader chats on EliteTrader, eSignal and FXStreet, sharing her expertise in both technical and fundamental analysis.

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