Good afternoon Forex Kings
This morning China and the US signed the phase one of the trade agreement. China has agreed to buy almost $95 Billion worth of US commodities. The market is hesitant to buy into the news as they will need to see evidence of increased shipments to China. China has promised to buy more goods, however it has not specified how much of each individual product it will purchase. However, this is potentially good news for the AUD and NZD as they are commodity related currencies.
Trumps impeachment trial is due to begin next week. The Senate will vote after hearing the evidence against Trump. Keep in mind the Senate has a Republican majority, therefore it is unlikely to see an impeachment against the President. However, a shock to the market next week could see some large moves in the market.
Here in Australia the devastating bush fires have kept the AUD weighed down. However, the data coming from Australia continues to improve which suggests we may not see a rate cut in Feb from the RBA which has been priced in.
AUDNZD Technical analysis
AUDNZD Daily Time Frame
The AUDNZD has come up from its historic support level and it created a bullish divergence on the RSI. This has worked well previously in spotting reversals on tops and bottoms.
AUDNZD – 1 Hour Time Frame
What is the importance of a trend line?
Once a trend line has been broken, it may use that same trend line as support or resistance. In December a key trend line was broken which was previously resistance, the market then used that resistance line as support (an area to buy from).
Similarly we have just seen a break of a key trend line, the market may now use that trend line as support.
AUDNZD – Trade Setup
We are going to keep our pending order on the AUDNZD at the same level in case of a break lower. However we are also going to enter the market now with a tight stop loss meaning we can utilise some leverage.
Trade setup: BUY market order, stop loss set at 1.0370 and take profit set at 1.0480.
Stop loss: 45 PIPS
Take Profit: 76 PIPS