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Breakout or Break Down? NZD/USD Eyes Critical Resistance Pre-NFPs

Breakout or Break Down? NZD/USD Eyes Critical Resistance Pre-NFPs

2014-06-05 20:44:00
Michael Boutros, Strategist
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Talking Points

  • NZDUSD testing Fibonacci / channel resistance
  • Monthly opening range set between 8400-8500
  • Major Event Risk on tap from US tomorrow

NZDUSD Daily Chart

Breakout or Break Down? NZD/USD Eyes Critical Resistance Pre-NFPs

Chart Created Using FXCM Marketscope 2.0

Technical Outlook

  • NZDUSD at near-term resistance confluence 8500/15
  • Breach targets topside resistance objectives 8583/90, 8634- bearish invalidation
  • Interim support at 8410/15
  • Support break targets key objective at 8328/59- bullish invalidation
  • Daily RSI resistance trigger break- bullish
  • Major Event Risk Ahead: US Non-farm Payrolls tomorrow

NZDUSD Scalp Chart

Breakout or Break Down? NZD/USD Eyes Critical Resistance Pre-NFPs

Notes: The pair is testing resistance ahead of tomorrow’s US employment report and the near-term focus remains on the 8500-handle. The level is defined by the 38.2% retracement of the 2014 range, the April lows and operative trendline resistance off the yearly high. Note that while we have technically broken above the weekly opening range high, we will look for validation tomorrow with NFP’s likely to offer a catalyst. A topside breach of this level sets are bias on a more constructive approach heading into June against 8400.

An outside day reversal of the Dow Jones FXCM US Dollar Index (Ticker: USDOLLAR) at key resistance today supports our base-line scenario noted in yesterday’s report for a “near-term pullback in the greenback heading into the start of the month.” Bottom line: we’ll remain prudent heading into NFPs with a general near-term bias weighted towards the topside while above 8500. A break below 8400 invalidates our near-term outlook with such a scenario targeting a longer-term support objective at 8360. Follow the progress of this trade setup and more throughout the trading week with DailyFX on Demand.

* It’s extremely important to give added consideration regarding the timing of intra-day scalps with the opening ranges on a session & hourly basis offering further clarity on intra-day biases.

Key Threshold Grid

Entry/Exit Targets

Timeframe

Level

Technical Relevance

Bearish Invalidation

Daily / 30min

8515/19

100% Ext / April Lows

Break Target 1

30min

8545

38.2% Retracement

Break Target 2

30min

8565/70

Monthly Pivot / Soft Resistance

Break Target 3

Daily / 30min

8586/90

50% Retrace / 61.8% Ext / 50MDA

Break Target 4

Daily / 30min

8634

61.8% Retracement

Break Target 5

Daily

8676

4/10 Close / 2013 High

Support Target 1

Daily / 30min

8496 - 8500

Weekly ORH / 38.2% Retracement

Support Target 2

Daily / 30min

8475/79

Soft Support / 100DMA

Support Target 3

30min

8450

61.8% Ext

Bullish Invalidation

Daily / 30min

8410/15

50% Retrace/ 1.618% Ext / Monthly ORL (8400)

Break Target 1

Daily

8357/64

S1 Monthly Pivot / 38.2% Retrace / 200DMA

Break Target 2

Daily

8328

61.8% Retracement

Average True Range

Daily (20)

55

Profit Targets 14-16pips

*ORH: Opening Range High

*ORL: Opening Range Low

Other Setups in Play Heading into NFPs:

---Written by Michael Boutros, Currency Strategist with DailyFX

For updates on this scalp and more setups follow him on Twitter @MBForex

To contact Michael email mboutros@dailyfx.com or Click Here to be added to his email distribution list

Join Michael for Live Scalping Webinars this week on Monday on DailyFX and Tuesday – Thursday on DailyFX Plus (Exclusive of Live Clients) at 15:30 GMT (11:30ET)

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