Market highlights from the last week
Wednesday May 6: Australia posted a record trade surplus for March which provided an element of relief despite unease over future trends while risk appetite stabilised
Thursday May 7: The Australian dollar was hampered by a correction from recent gains
Friday May 8: US jobs data was horrific, but slightly better than consensus forecasts with non-farm payrolls declining 20.5 million and unemployment rising to 14.7 per cent.
Monday May 11: NAB business confidence recovered to -46 in the latest month from -65 previously. Overall risk appetite remained fragile amid trade tensions, while damage to the Australian dollar was amplified by China’s decision to impose a ban on meat imports from four Australian processors
Tuesday May 12: Australian consumer confidence increased in the latest week with AUD/USD around 0.6475 in early Europe. RBNZ increases QE overnight
AUD/NZD Price Analysis
Let us have a look at the technical viewpoint.
Monthly: Traded to an all-time low in March 2020 but levels below the previous support at 1.0020 (April 2015) found buying interest. We have seen a 7.8 per cent recovery from the base.
Weekly: Trades to the highest level in 25 weeks. Previous resistance is located at 1.0866
Daily: We have a 261.8 per cent extension level located at 1.0801. From an Elliott wave perspective, this could be the completion of a fifth wave (five waves up by five waves down)
Intraday 4-hour: The move to 1.0792 would form an intraday bearish Butterfly pattern.
Outlook: Although the long-term outlook is mixed, the cross looks close to exhaustion. Selling into rallies targeting a channel base and the 78.6 per cent pullback level at 1.0160 offers a sound reward against risk setup over the medium term
Possible trade setup
Action: Selling at the market (currently 1.0770)
Potential return on risk to first target: R8 (reward 720 / risk 90)
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