AUD/NZD: When is the time to sell? ⏱
Hello traders,
TECHNICALS:
The pair reached multi-month lows and continued to trade in a healthy downtrend, although the current fall looks somewhat overextended. Selling volume is rising, but institutional players haven't had the opportunity to square up their books just yet, which is why I expect a pullback to the liquidity zone.
POSITIONING:
Short positioning is reaching extreme levels in leveraged money in NZD, increasing the risk of a short-squeeze. Leveraged money remains bullish on AUD, but the net long positioning has been falling with the latest CoT report.
CORRELATIONS:
AU and NZ 2-year yield differentials point at further weakness, as well as AU/NZ stock indices. Chart here.
FUNDAMENTALS:
RBA Governor Lowe doesn't see rate hikes for the next three years. The Aussie dollar fell after the RBA meeting, but tensions with China, a major trading partner of Australia, is also hurting the currency.
UPCOMING ECONOMIC REPORTS:
RBA Gov Lowe speaks on Wednesday, 12:00 am London time. Expect some volatility here, ideally to the liquidity zone for a short position.
== SUMMARY ==
Waiting for a pullback to around 1.0550 before entering short, ideally supported by volume.
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TECHNICALS:
The pair reached multi-month lows and continued to trade in a healthy downtrend, although the current fall looks somewhat overextended. Selling volume is rising, but institutional players haven't had the opportunity to square up their books just yet, which is why I expect a pullback to the liquidity zone.
POSITIONING:
Short positioning is reaching extreme levels in leveraged money in NZD, increasing the risk of a short-squeeze. Leveraged money remains bullish on AUD, but the net long positioning has been falling with the latest CoT report.
CORRELATIONS:
AU and NZ 2-year yield differentials point at further weakness, as well as AU/NZ stock indices. Chart here.
FUNDAMENTALS:
RBA Governor Lowe doesn't see rate hikes for the next three years. The Aussie dollar fell after the RBA meeting, but tensions with China, a major trading partner of Australia, is also hurting the currency.
UPCOMING ECONOMIC REPORTS:
RBA Gov Lowe speaks on Wednesday, 12:00 am London time. Expect some volatility here, ideally to the liquidity zone for a short position.
== SUMMARY ==
Waiting for a pullback to around 1.0550 before entering short, ideally supported by volume.
Please hit the "LIKE" button if you find this post useful. Also, don't forget to follow to get more trade ideas like this. Thanks!
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