- AUD / NZD is bracing for both short and long term shorting opportunity.
- Price action is neutral on the day but overloaded on the weekly and monthly periods.
- In the short term, the 15 minute correction to the hourly bearish pulse is compelling if it is below the 21 moving average.
As can be seen from a top-down analysis, the market is stretched too far to the upside from a technical perspective and positioning analysis.
First, as price plunges cable into the monthly supply area, kiwifruit has been a notable year behind so far.
The most notable move in the week ending August 18 was the positioning of the NZD, which jumped 10% in open interest. The Aussie was hardly changed.
This could lead to a follow-up in the spot market where the Aussie has already had a good run so far.
First of all, the hourly calendar shows that the bulls have had three attempts to break out higher and are walking on late trendline support at this point.
A test of the support and a subsequent break down could be in order:
Monthly and weekly charts
The price is in the weekly chart, above, looks too broad and a 38.2% Fibonacci retracement could be in order.
In the monthly chart, below, a remainder of the bearish W formation neckline could be in order if the bears keep pace.
During this time, however, the daily support structure is the key in the work for a trading set-up.
Bears will need to be patient and carefully wait for an opportunity to bypass the pair if or when the support structure breaks. Until it does, the outlook remains neutral.
Possible day shorting opportunity
For the immediate future, the price is tiring on the upside as seen in the 15 minute chart above as it corrects less than 78.6% Fib from the last one hour bearish pulse.
The price has moved in such a way that a breakout of the 15 minute out of 21 moving average creates an opportunity to short under the supporting trendline structure.
A momentum indicator such as MACD below zero or RSI below 50 would help the bearish outlook.
On the other hand, if the price remains on an upward trajectory and passes above a 78.6% Fib, such a scenario would invalidate the set-up.