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NZDUSD – Trendline Support and Tweezer Bottom

Market Analysis

NZDUSD, Daily              

The NZD has had a great 2016 so far and continues to look strong against the AUD and USD. The NZDUSD traded as low as 0.6328 back in January and since has rallied to its recent high on September 7 at 0.7484, a move of some 18%.  The inevitable profit taking that was triggered by the Tweezer Top on September 8 and the subsequent move down to some long term support and Tweezer Bottom, tweaked my interest yesterday for a move to the LONG side.  The support area around the confluence of the 50 DMA, 38.2 Fibonacci level and the long term monthly channel suggest evidence of further upside potential.  The break and hold of the 20 DMA on yesterday’s weak US data confirmed the entry at 0.7280. Target 1, a little over the 14 Day ATR is at 0.7370 and Target 2 close to the recent high at 0.7450.

The Parabolic SAR remains negative as the pair trade below 0.7300 and any break of the 50 DMA and 38.2 Fibonacci level could move the pair lower. However, the RBNZ are expected to cut interest rates again before the year end following their 25 basis point cut (from 2.25% to 2.00%) in the Official Cash Rate last month. Governor Wheeler said at the time “…further policy easing may be required to ensure that inflation settles near the middle of the target range. We will continue to watch closely the emerging flow of economic data.” As the FED is widely expected to remain unmoved on rates next week the fundamentals remain positive for the Kiwi.

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Stuart Cowell

Market Analyst


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