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Market update: AUD/NZD and EUR/AUD might have similar trade set-ups; will ranges break?

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Navigating the nuanced terrain of EUR/AUD and AUD/NZD technical analysis reveals a propensity for range trading.


original-size.webpSource: Bloomberg


Daniel McCarthy | Strategist, | Publication date: Thursday 26 October 2023 05:07

EUR/AUD technical analysis

EUR/AUD has been contained between 1.6200 and 1.7100 for four months and might be in range trading mode for now. The price has struggled this week to overcome the recent peaks just below 1.6900 when it topped out at 1.6845 on Monday. Those levels might offer resistance on another retest ahead of the two-year high at 1.7065.

The dip on Wednesday stopped short of the 100-day Simple Moving Averages (SMA) near 1.6550 and it may provide support on another sell-off. Further down, support could be at the previous lows at 1.6445 and 1.6320 ahead of a potential support zone in the 1.6235 and 1.6265.

The clustering of the 10-, 21-, 34-, 55- and 100-day Simple Moving Averages (SMA) between 1.6550 and 1.6710 could support the range trading perspective.

EUR/AUD daily chart


original-size.webpSource: TradingView

EUR/AUD weekly technical analysis

Zooming out to the weekly chart, EUR/AUD remains in an ascending trend channel. The price has been trading above the 52-week SMA since September 2022, when the trend started to emerge. A cross below this SMA might indicate an exhaustion of the trend.

EUR/AUD weekly chart


original-size.webpSource: TradingView

AUD/NZD technical analysis

AUD/NZD has a tendency for range trading, albeit sometimes quite wide ranges, and this is not surprising given the close proximity and similarities of the two economies.

Similar to EUR/AUD above, the clustering of the 10-, 34-, 55- 100-, 200- and 260-day Simple Moving Averages (SMA) in AUD/NZD between 1.0777 and 1.0825 could back up the range trading perspective.

The price action yesterday displays a Spinning Top Candlestick and it could suggest that a reversal might be in play. The peak seen yesterday at 1.0916 was just shy of the September high of 1.0918 and the July high of 1.0926. This area may offer resistance on a rally ahead of a potential resistance zone near 1.1050.

Support may lie at the existing breakpoints or previous lows of 1.0732, 1.0725, 1.0718, 1.0610 and 1.0560.

AUD/NZD daily chart


original-size.webpSource: TradingView

AUD/NZD weekly technical analysis

The narrowing of ranges has seen AUD/NZD create a Symmetrical Triangle. It is currently trading above the upper edge of the triangle and if it closes above the descending trend line, it might signal a breakout and bullish momentum might emerge.

If it does not close above the descending trend line, it could prove to be a false break and the triangle formation would be intact in that scenario, potentially signalling a reversal.

AUD/NZD weekly chart


original-size.webpSource: TradingView




This information has been prepared by IG, a trading name of IG Australia Pty Ltd. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients.

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