Australian And New Zealand Dollar Breakout Potential Draws Analysts

The Aussie and kiwi dollars have come under renewed selling pressure through the end of this week. Heading into the weekend, ranges are clearly growing progressively mature and strained, while a few crosses have already made the intial push for a breakout. A resolution to this congestion period must come soon; but when will it happen and in what direction are the questions are DailyFX Analysts are asking and answering to prepare us for the eventual move.

Currency Strategist - John Kicklighter

My picks: Short NZDUSD
Expertise: Combining Money Management with Fundamental and Technical Analysis
Average Time Frame of Trades: 3 days - 1 week

AUDCAD has been a frequented pair for me. I have been waiting for a breakout from this for some time - and have taken advantage of the very mature range in the interim. In the Pairs To Range Trade report yesterday, the AUDCAD was once again the topic of conversation; but the article also suggests that any congestion move would be considered over a very short time frame. This is the case because this pairs is now forming a horizontal range between 0.7850 and 0.8125 at the end of a notable wedge. With volatility still abnormally high, such boundaries cannot hold. From a fundamental standpoint, there are few major pieces of event risk scheduled to cross the wires over the coming week from either country; but the Canadian dollar has already come under significant selling pressure all over the market. Interestingly enough, so has the Aussie dollar. The match momentum will diverge eventually and AUDCAD will make its move - perhaps on tomorrow's Canadian CPI numbers.

For the setup, a higher time frame wedge is already breaking. The ceiling in the pair is cut from a faling trend from the July 29th high. The important level now is 0.82 which represents the 38.2% retracement of the July to October bear wave and 50-day SMA. The support to the wedge is the rising trend from October 9th, though this level has already found an intraday push. Range support and a 50% retracement mof the October 9th to 22nd reversal calls a hard floor at 0.7825/40. A confirmed break beyond either of these levels can finally signal a breakout.

Currency Strategist - Terri Belkas

My picks: Short AUD/CAD
Expertise: Fundamentals Combined With Technicals
Average Time Frame of Trades: 1 - 3 Days

I'm sticking with my trade from yesterday: short AUD/CAD. This trade is based more on technicals than anything else, and looking at the consolidation of AUD/CAD below trendline resistance and within a range of roughly 0.7850-0.8100 , I think we'll ultimately see the pair break lower. Potential targets include the psychologically important 0.75 level while market-wide declines in carry trades could trigger losses down toward the 10/8 low of 0.7218. Stops should be placed a little wider than I initially indicated, perhaps above the November 10 high of 0.8220.

Currency Analyst - Ilya Spivak

My picks: Long AUDNZD above 1.1879
Expertise: Macro Fundamentals, Classic Technical Analysis
Average Time Frame of Trades: 1 week - 6 months

AUDNZD put in a bottom at 1.0616 in early October and has since been rising steadily. Most recently, bullish momentum surpassed resistance at 1.1641, the 61.8% Fibonacci retracement of the 09/26-10/10 decline. Near-term resistance stands at 1.1879, the 76.4% Fib level. Look for a daily close above this to go long, targeting the 09/26 high at 1.2273.

Currency Analyst - John Rivera

My picks: Short AUD/CAD
Expertise: Fundamentals Combined With Technicals
Average Time Frame of Trades: 2-4 Days

The AUD/CAD is poised for a breakout as it has been trading in a tight range. Traditionally a wedge formation following a dominate trend leads to a breakout in the same direction. Therefore, I am looking for the pair to go lower with a break below Bollinger band support at 0.7824 as my trigger and a target of 0.7500. However, a break above the 50 Day SMA at 0.8172 would change my bias.

Currency Analyst - David Song

My picks: Short NZD/USD
Expertise: Fundamentals and Technicals
Average Time Frame of Trades: 2 - 10 Days

Falling oil prices continues to favor a bearish outlook for the commodity bloc, and I anticipate risk trend to hold over the following week as credit conditions remain far from normal. The New Zealand dollar broke below the October lows to reach a six-year low against the greenback, and may fall lower over the following week as investors continue to curb their appetite for risk. The NZDUSD continued to hold within a downward trending channel over the week to reach a low of 0.5196, but bounced higher during the overnight session to reach a high of 0.5348. The lack of momentum to break above the 10/27 low of 0.5350 suggests that investors remain bearish against the pair, and may fall towards the 0.5000 level to test for psychological support over the near-term as the flight to safety continues.

DailyFX

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