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NZD/USD Prices Consolidate Post Inflation Data

NZD/USD Prices Consolidate Post Inflation Data

2016-05-17 14:00:00
Walker England, Forex Trading Instructor
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Talking Points

  • The NZD/USD Fails to Breakout Higher on Inflation Data
  • Prices are Consolidating in an Ascending Triangle
  • SSI Reads neutral at +1.03

NZDU/USD prices have begun to range this morning, after a brief spike in price overnight on the RBNZ’s 2Year Inflation Expectations. Expectations were initially set for (2Q) at1.63%. However, these expectations were beat with a release of 1.64%. After this data release, prices have quickly declined back inside of today’s pivot range. This move has at least temporarily invalidated last night’s breakout. As displayed below, today’s range measures 34 pips and begins at the R3 pivot found at .6805. If prices remain beneath this value, it opens up the NZD/USD to test values of support. This includes the S3 pivot found at .6771.

NZD/USD 30 Minute Chart with Camarilla Pivots

NZD/USD Prices Consolidate Post Inflation Data

(Created using Marketscope 2.0 Charts)

What’s next for the US Dollar? Find out more with our Free Dollar forecast!

Today’s consolidation is technically part of a broader ascending triangle. This triangle, as seen below, has been created by connecting a series of daily highs, beginning with the May 9 high at .68479. So far, this point is acting as resistance, with price failing to break this barrier in the last six trading sessions. Support for the ascending triangle is alternatively found by connecting a series of lows beginning with the Standing May 2016 low at .6716. With prices continuing to consolidate, traders may elect to trade between these values of support and resistance. Alternatively, traders may look for a breakout in price for the NZD/USD and then enter new positions in the markets chosen direction.

NZD/USD Daily Chart

NZD/USD Prices Consolidate Post Inflation Data

(Created using Marketscope 2.0 Charts)

SSI Data is being tracked in real time. Find out more at the DailyFX’s sentiment page.

SSI (speculative sentiment index) for the NZD/USD currently reads at +1.03. This neutral reading in sentiment is typical of consolidating markets. In the event of a breakout, traders may look to SSI to validate any directional moves. As a contrarian indicator, a breakout above resistance may be validated with SSI shifting to an extreme in negative positioning. Conversely, a move in price below support may be validated with SSI moving to a new positive extreme.

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