AUDNZD Hunting Parity

Kiwis and Aussies have always shared a close bond being neighbors and all and there has always been a competitive rivalry between the two countries. One thing the Aussies have always had over the Kiwis is that their Dollar has been worth more. However, history may be set to change in the coming days and weeks as AUDNZD is getting mighty close to parity.

On Monday the AUDNZD exchange rate got to 1.0019 which is just 19 pips shy of parity. Since then we have seen the AUD strengthen against the NZD and currently we are now about 176 pips shy of parity. So will 1.0019 be as low as AUDNZD will get or will AUDNZD sell off further to test the parity level? Let’s take a look at the charts to see if they might give us any clues.

Below is an image of the AUDNZD daily chart as it stands now. The parity level of 1.00 is also marked in by the blue horizontal line. What we can see from the chart is that we have a solid downtrend with price making lower highs and lower lows. In the most recent pullback price has pulled right back into what we call the sell zone (the area between the 10 and 20 period moving averages). On Monday price was overextended from the moving averages so a pullback was expected and that is what we got. The likelihood now would be for the downtrend to continue so price would make a new lower high and then continue down to make a new lower low which may give us a test of parity. If the current daily candle closes bearish then that may be a great opportunity to get short AUDNZD if the low of the bearish candle is broken.  

If price was to head lower and test parity, prices reaction to parity would give us allot of insight into who’s in control of the market. If price were to break straight through parity with no regard for the significance of the level then that would tell us that sellers are firmly in control of this market. However if we did see price bounce off parity and not break through then that would start to indicate that perhaps buyers are starting to gain control of the market.

We will be keeping a very close eye on this pair in the coming days and weeks to see if history can be made so make sure you keep an eye on this pair too!

Happy Trading!

Regards,
The TWP Team