The AUD/NZD pair does not get a lot of headlines, but it can offer plenty of clues for other markets, as well as be traded for trend followers.
The Australian dollar has fallen a bit against the New Zealand dollar in pretty noisy trading on Tuesday across the Forex world. That being said, this is an interesting technical analysis setup for me as we fell toward the 50-day EMA, only to turn around and bounce slightly.
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If the market were to continue to bounce from here, I don't see what stops the Aussie from getting to the 1.17 level. If we break down below the 50-day EMA, then the 1.14 level is your next major support level. This is an area that needs to be defended by the bulls if the trend continues to the upside.
This is a pair that generally isn't overly exciting. It does grind a lot, much like the Euro against the Pound or the Dollar against the Canadian dollar, because of the massive amount of trade that is being done between these two countries.
Triangulation
That being said, I look at this as a signal for the Australian dollar and the New Zealand dollar against the US dollar in a process called triangulation. If the Aussie bounces from here, then it will perform better against multiple currencies around the world in relation to the New Zealand dollar.
That being said, you can simply follow the trend and collect profit that way as well. This is an area that I think will continue to be important, and if we can get a bit of a bounce from here, 150 pips would not be a stretch of imagination as it gets us right back to the biggest extension. With that, I remain bullish, but I also remain patient.
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