NZD/USD Forex Technical Analysis for June 16, 2016
Technical Analysis – The NZD/USD pair initially fell during the day on Wednesday, but turn right back around at the first sign of support and broke back above the 0.70 level. At this point in time, if we can break above the 0.71 handle, I feel that the market can continue to go much higher. I also believe that there is a lot of noise below so it is going to be difficult to sell this market and therefore I’m looking to see if we can break out before getting involved. Keep in mind the commodity markets do influence the Kiwi dollar.
In Other View Point – Time to sell the Kiwi
See some notes on chart The Kiwi is sitting on a 61% retracement from its high to low move of .71473-.69633. CMF(26) is heavily bearish WPR(9) is in an overbought condition. The last couple of bars have been indecision bars (tops/dojis whatever). My original thesis was negated due this switch in CMF(26) since I last posted on Sunday. This is however setting up for a nice selling squall I think. Looking to short the pair on a strong candle down after the WPR(9) pulls back from overbought. A logical stop loss would be .70931 or slightly above. We should test target #1 the low of .6933. If that is breached with conviction, .69131 is not far behind (target#2) Risk reward to be posted on entry.
In other View Point – NZD/USD consolidates post-GDP rally below 0.7100
The post- GDP rally in NZD/USD appears to lose strength over the last hour, sending the prices slightly lower as risk-off intensifies in Asia.
NZD/USD retreating towards 5-DMA at 0.7050
Currently, the NZD/USD pair advances +0.48% and now hovers near post-GDP lows reached at 0.7066. The Kiwi stalled its bullish run and now consolidates strong gains induced by upbeat NZ Q1 GDP figures. NZ 2016 Q1 GDP bettered expectations, coming in at +0.7% q/q vs +0.5% estimates and +0.9% last, while Q1 GDP y/y stood at +2.8% vs 2.6% expected and 2.3% prior.
Moreover, optimistic remarks from NZ FinMin Bill English delivered earlier today also keep the Kiwi pair underpinned. However, the Kiwi meets fresh supply on deteriorating market conditions as the Asian equities come under pressure amid tumbling oil prices. Further, upside looks limited as unimpressive NZ GDT price index continues to weigh on the sentiment around the NZD.
Later today, persistent USD weakness may continue to lend support to the pair ahead of the US CPI report lined up for release in the NA session. The US dollar lost ground across the board after the FOMC kept rates on-hold, while came out more dovish than expectations.
NZD/USD Levels to consider
To the upside, the next resistance is located at 0.7088 (daily top), above which it could extend gains to 0.7100/25 (round number/ daily R2). To the downside immediate support might be located at 0.7050/32 (5 & 10-DMA) and from there to at 0.7000 (June 9 Low).