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Kiwi Range Bound Amid Quiet Economic Docket

Kiwi Range Bound Amid Quiet Economic Docket

2011-05-09 21:38:00
Michael Boutros, Technical Strategist
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Kiwi_Range_Bound_Amid_Quiet_Economic_Docket_body_Picture_2.png, Kiwi Range Bound Amid Quiet Economic Docket

Short-term scalpers have been eying the New Zealand dollar as it continues to range between 0.7970 and 0.7885. Our contrarian Speculative Sentiment Index show traders remain net short, but the data has continued to even out, suggesting biased does not significantly favor either side. Furthermore, the daily RSI has leveled off just above the 50-mark- again suggesting a lack of momentum of the kiwi.

The New Zealand dollar, which saw sharp declines last week on the back of wide spread risk-aversion flows, continues to drift amid lackluster performances in global equities. These conditions have set the stage for the pair to continue to range between 0.7940 and 0.7910. A topside break above 0.7970 level tested on May 6th would nullify the scalp, while a break below 0.7910 provides additional entries at 0.7885. A clear break below this level would once again void this particular trade.

Kiwi_Range_Bound_Amid_Quiet_Economic_Docket_body_Picture_3.png, Kiwi Range Bound Amid Quiet Economic Docket

Economic data out of New Zealand last week continues to suggest steady progress with the unemployment rate unexpectedly falling to 6.6% from a previously downwardly revised 6.7%. Trade balance data and building permits data has also been firming up in the past month. The medium-to-long term outlook remains bullish for the kiwi once a confirmed break of this channel is evident. With the global economic docket relatively quiet this week, traders will be looking for scalps on the NZD/USD pair as market risk appetite rebalances.

Key Support/Resistance Levels to Watch

Indicator

Timeframe

Level

Fibonacci Retracement – 23.6%

Daily

0.7887

Fibonacci Retracement – 38.2%

Daily

0.7931

Fibonacci Retracement – 50.0%

Daily

0.7867

10-SMA

Daily

0.7985

20-SMA

Daily

0.7963

50-SMA

Daily

0.7680

RSI

Daily

50.17

Event Risk

Overnight New Zealand will be releasing April debit/credit card retail spending. Although the data is not expected to be of significant consequence, a stronger than expected print could cause the pair to breech the upper bound resistance level of the channel, nullifying the scalp. More pertinent data follows a few hours after, with the April house prices report. An off-consensus print here will be more likely to deflect this particular scalp setup.

Written by Michael Boutros, Currency Analyst for DailyFX.com

To contact the author of this report, please send inquiries to:mboutros@dailyfx.com

You can also follow Michael on Twitter @MBForex

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