NZDUSD Technical Analysis | Forexlive
Last week we heard from
several central bank speakers who emphasized the need of taking a
data-dependent approach before considering further policy tightening as they
don’t want to overdo it. In fact, while the majority of the FOMC members expect
two more rate hikes this year, they consistently highlight that these decisions
hinge on the data. Last week’s data trends leant more towards a rate hike,
supported by the strong housing
market data, the stable US
Jobless Claims, and the beat in the US
Services PMI.
The upcoming NFP and CPI
reports will have a crucial role in shaping future actions but if we continue
to see good data, it is likely that the Fed will indeed proceed with two more
rate hikes instead of just one that the market currently expects. Conversely, The
RBNZ
remains on hold for now after they hiked rates to 5.5% and the New Zealand
economy slipped into a technical recession. The central bank wants to see how things
develop on the data front before considering additional tightening.
NZDUSD Technical Analysis –
Daily Timeframe
On the daily chart, we can see that NZDUSD has
bounced recently on a strong support
zone near the 0.6115 level where we have the confluence
of the previous swing high level, the red 21 moving
average and the 61.8% Fibonacci
retracement level. That’s where the buyers entered with a defined risk below
the zone targeting the 0.63 handle.
NZDUSD Technical Analysis – 4 hour Timeframe
On the 4 hour chart, we can see that the price is
trading within a falling channel that can turn into a bullish
flag once the price breaks above the upper bound of the channel. The target
in that case would be the equal extension of the first leg higher, also called
the “flagpole”, which comes right at the 0.63 resistance. The sellers, on the
other hand, will need a break below the 61.8% Fibonacci retracement level to invalidate
the bullish setup and target the 0.5987 low.
NZDUSD Technical Analysis –
1 hour Timeframe
On the 1 hour chart, we can see that the
price has rejected the upper bound of the channel and it’s now falling into a
previous resistance
that now may turn support. We have some good confluence here with the trendline,
the 50 and 61.8% Fibonacci retracement levels and the red 21 moving average.
This is where the buyers should enter the market with a defined risk below the
trendline and aim for a breakout of the bullish flag to ride the rally into the
0.63 resistance. The sellers, on the other hand, will want to see the price breaking
below the trendline before piling in and extend the eventual fall into the
0.6115 support.
The economic data for this
week is relatively light, featuring only the US Jobless Claims on Thursday and
the US PCE on Friday. However, despite the limited data releases, we will still
hear from many central bank members throughout the week.
See also the video below: