We have all but confirmed the inverted Head and Shoulders pattern, a bullish signal in an uptrend. We now await RBA statement and Dairy prices to make or break this setup.
The Head and Shoulders pattern projects an approximate target around 1.1780, depending on when and if the neckline confirms it. However I am seeking more conservative targets here, nameley becuase at time of writing both AUD and NZD are trying to fight their way off of the lows against the Greenback.
We can take a move above 1.13 as a breakout level and seek intraday setups towards the 1.143 highs or 1.15 resistance zone. Beyond here we have 1.166 highs which is a 138.2% projection and September 2013 high.
Yesterday’s close confirmed a Dark Cloud cover to warn of near-term weakness and possible a move towards 1.11. As long as it remains above here we can assume ‘RS’ remains and either buy at support or await extra confirmation for a break above 1.13
Potential catalysts for this cross include today’s RBA minutes. With the removal of any reference to the exchange rate in the previous statement then any signal that AUD rate is in line with RBA expectations could send Aussie higher. However we also have GDT prices which NZ is particularly sensitive too, so if we see the trend continue (with dairy prices plummeting) then this too could help support this bullish setup.