AUDNZD - Weighing the long and the short term

CMC Markets

One of the most valuable things that I ever learned was to do chart analysis on a long-term to short-term basis. Even if you are trading on a 30 minute chart you still need to know the direction of the broader trend and where potential turning points may be - keeping in mind that a trend on the 30 minute chart is unlikely to overwhelm that of a weekly chart if they don't correspond with one another. What follows is an assessment of the AUDNZD and a look at the trends that exist over different timeframes. I am using volatility bands for the most part but you can use any method you like. A good habit to get into is to mark key levels from longer term charts at the corresponding points of shorter term charts - this will highlight potential points of support and resistance that you should remain aware of.

For those trading anything in the FX space denominated in AUD you will want to be mindful of the Chinese CPI and PPI data being released today.

The main takeaway from this chart is the broad direction which is the uptrend. You can see that the price has remained primarily above the 200 week moving average (the centre blue line). You will note though that of late the line is beginning to plateau. I don't think I would call this a trend interruption as yet but it's something to keep in your mind for the future.

This is the daily chart and gives the analyst a closer view of what that slowdown on the weekly chart is being built of. You can see that there is a resistance line running along at around 1.3060 which will represent a good medium term price target. The most recent trough in the price touched and respected the -1.25 Standard Deviation level so that also adds to the case to support the trend still being in existence.

The 4 hour chart is where you can start to see a bit of market indecision going on. The 200 period MA is headed lower while the 50 period (centre red line) is headed higher. The 50 MA has seen a recent retest and respecting but it will be worth keeping an eye on what happens as price gets squeezed between the 50 and the 200. If you take a look at this chart on your platform you can see that the direction of the 50MA and price respect for it - even in comparison to the 200MA has been a good directional indicator for traders.

To complete my analysis I am looking at the 1 hour chart and you can see here a very consistent looking uptrend. For the most part you can see how troughs have been formed at the -1.25SD level of the 50 period moving average. This I think will give short-term traders a good stop-loss level if it is broken with any significance. Traders would want to be mindful of potential resistance at the level marked as the 4 hour 200 period moving average. However a decent push through this level may see the trader add to their long positions.

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