Hello, this is Ashraf Laidi, from CMC Markets, and I'm happy to give you this edition of CantosCharts.

We are focusing today on this pair that is commonly known as the battle of the high yielders, the Australian dollar versus the New Zealand dollar. Two currencies that boast the highest-yielding, the highest yields in the industrialised world. And with the Australian, 3.75 per cent, as we speak, we are speaking right now with at 3.75 per cent before the Reserve Bank of Australia decision, which the market anticipates to raise interest rates to 4 per cent. We have seen surprises before.

This presentation is not going to predict what the RBA will do or will not do. Regardless of that, we're going to go beyond that. So this chart, it looks like it had made up its mind that it's going to be reaching a peaking process, and then it's going to come down.

Aussie versus the Kiwi weekly chart. This is the slow stochastics using the 933. And it shows you a textbook, plain vanilla textbook case of bearish diversions on stochastic. This is a weekly chart, ladies and gentlemen. The price is going up, but the stochastics is going down. This is 101 divergence in stochastic. This stochastic, it's like the accelerator. The price is going up, but the acceleration may be slowing. And this may tell you that this could be tired.

The weekly chart here shows that we went all the way towards 1.2860, 1.2890. Actually, last week we came back down and we went shortly towards 1.2780. But then we went back up.

Now, let's bring back the role of the Reserve Bank of Australia decision into this. Basically, when the Central Bank would raise interest rates and they are not expected to do so and they do so, that is good for the currency and if they unexpectedly keep interest rates unchanged, that is bad for the currency.

The thing here is that we may be going into a lose-lose scenario for the Aussie. A rate hike would likely be accompanied by a statement that would basically say that they are pretty much done, or nearly done, the tightening process. And that's what the traders could be look for. And that maybe one of the reasons that would bring down the Aussie.

An RBA decision not to raise interest rates would be a disappointment, would be a shocker. And that would bring down the Aussie.

And so taking back this into the price action, and rather than the Central Bank action, that's why we have showed you from a stochastic perspective the dangers for the Aussie-Kiwi.

And actually, you don't need to be a genius in the stochastics or in technical analysis. Just look at these patterns. You've got a rise. You've got congestion, and you've got a big drop. This congestion is accompanied by this pattern in stochastic.

Now look at this congestion and look at this stochastics. What are we looking here?

Markets do repeat themselves. This is the heart of technical analysis. Okay? The cycles, the patterns recur. It's our job to point them out, whether we use stochastics, we use the oscillators or we use the Fibonacci. But this pattern stands out. When you bring into it the RBA decision, the role of the RBA, that, ladies and gentlemen, could be the catalyst.

That could be the catalyst for either a disappointment, if they don't raise rates it would be bad for the Aussie. And if they do raise interest rates, they will be basically signalling or basically hinting near the end, and that would also be bad.

We could also take it farther in the week. This is the week when we have a non-farm payrolls in the United States, the jobs report in the United States. Some room for disappointment there, maybe. So if the market does drop and risk aversion comes up - meaning risk drops - that is bad for the higher yielder, the Aussie versus the Kiwi.

And therefore, it's going to be just a question of time before we're going to come down here towards the 1.2740 and then really eventually towards the 1.26.

I want to take you to a longer-term Aussie-Kiwi chart. I will take you back. See where we are - 1.2890, [1.259], and look at that. The high - 1.2950 was the high from May 1'09, near the March '09 high, near the July '08. In English, this does not have much more upside to go. The fundamental reasons, we gave them to you. That's why it seems that, again, for those who are looking to make money out of this, and to short this, you have to be careful. You have to be ready to handle the market going against you to as high as towards 1.2970, towards a high of 1.2980, because this chart, and these high-yielding plays like the sterling versus the Kiwi, or the sterling versus the Aussie, or the Aussie versus the Kiwi - they tend to waste some time. They tend to drag on before they do the big blow-up move.

So that's what we have to watch out for, ladies and gentlemen.

This is Ashraf Laidi, from CMC Markets. Happy to be here with you on CantosCharts. Thank you.