Long AUDNZD still appears like an interesting trade that could offer nice profits as a swing trade. But, timing the exact point in time when it starts to move up has been tricky over the past several weeks, as the pair continued to make bearish attempts.
However, after last week’s bad employment report from New Zealand, it seems that AUDNZD could start to move higher as the AUDNZD rate gets repriced for a more dovish Reserve Bank of New Zealand (RBNZ).
What’s more, the RBNZ meets tonight (or tomorrow morning New Zeland time) and aside from the bad employment report, things have not been looking good in other parts of the economy also. So, the RBNZ doesn’t have many reasons to be positive or hawkish about and that should help to weaken NZD and drive AUDNZD higher.
Technically, an inverted bullish head and shoulders pattern has formed and AUDNZD is just now banging on the neckline which stands around 1.0530. If it manages to break it, the projection target of the head of the pattern points to the 1.0660 area which is where the January highs stand.
So, it seems like a good technical setup as well as supported by the latest fundamental developments.
It is very likely that a breakout above the neckline will occur on the RBNZ meeting if they deliver a dovish message as described above. On the other hand, a neutral message should not be the reason for a big fall in AUDNZD, hence the probabilities favor AUDNZD to move higher around and after this risk event.
