Happy new year trading floor!
Hopefully we start the NY with a bang.
This year we are looking to position with some more slightly longer term plays building into swing positions. This will be along side our day trading positions. This means we could be holding a trade for a couple of weeks, giving us the opportunity to build additional positions in along the way. Some positions may require a wider SL and lower leverage, but our targets will also be further away. Once a position comes into the green we can build another trade into the trend on any pull backs.
With this strategy in mind, we are taking a close look at the AUDNZD.
AUDNZD – Weekly Charts
The AUDNZD had a strong bounce on a key support zone at 1.0440. This support zone is a historic key support level. As you can see, the AUDNZD is still relatively low on its 20 year range, which suggests there is potential for further upside. The AUDNZD has been range trading between 1.13-1.04 for roughly 6 years.
AUDNZD – Daily Charts
Taking a look at the daily charts, we can see a nice 5 wave structure higher making a possible wave 1 on the larger degree. Elliott wave theory would suggest the market could be setting up for another 5 wave structure that will extend above the major wave 1 at 1.1100. However, first there is a possibility of a pull back into the 1.0600 region to form a wave 2 structure. This will be a possible buy zone for us. Wave 2’s can be deep, and eliminate the majority of wave 1. The AUDNZD must hold its price above 1.0430.
We are looking to position a small position now, and an additional position on a pull back or once the 1.0730 resistance is cleared.
AUDNZD – 4 Hour Charts
Trade Setup: BUY – Market execution, current price 1.0685, stop loss 1.0600, take profit left open to run. Long term targets can be found at 1.1000 (if the plan progresses).
Stop loss: 85 pips
Take profit: 300+
This first position is our “anchor” and we will not be using a full risked position, we will add further leverage at a later stage.
If our SL is hit, we will be looking to reload the position from the 1.0555 support zone with an even greater risk V reward. As always we will keep you posted on any updates.