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NZDUSD Opening Range Setup- Rally Vulnerable Sub 8850

NZDUSD Opening Range Setup- Rally Vulnerable Sub 8850

2014-07-14 19:22:00
Michael Boutros, Technical Strategist
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Talking Points

  • NZDUSD stalls ahead of Record Highs
  • Rally vulnerable sub 8850- interim support 8790
  • Major Event Risk on tap from US, New Zealand this week

NZDUSD Daily Chart

NZDUSD Opening Range Setup- Rally Vulnerable Sub 8850

Chart Created Using FXCM Marketscope 2.0

Technical Outlook

  • NZDUSD fails ahead of all-time highs- Rally at risk Sub 8850
  • Interim support 8790- break targets channel support, July ORL (bullish invalidation)
  • Subsequent support objectives 8669, 8618
  • Key resistance 8841/51- bearish invalidation
  • Breach targets resistance objectives at 8911, 8973, 9130
  • Ongoing divergence in daily momentum signature- bearish
  • RSI break back below former resistance trigger to confirm reversal
  • Event Risk Ahead: US Retail Salesand New Zealand CPI tomorrow, Humphrey Hawkins Testimony Tues/Wed and RBNZ rate decision next week

NZDUSD 30min Chart

NZDUSD Opening Range Setup- Rally Vulnerable Sub 8850

Notes: Last month we highlighted the break-out potential in NZDUSD with a decisive and deliberate breach above the monthly opening range highs confirming our topside bias into the close of June trade. The pair has since taken out all our resistance objectives before failing just ahead of the record all-time highs set back in 2011 at 8841.

The focus now falls on the weekly opening range as we hold just below this key resistance threshold with the pair continuing to trade into the apex of a consolidation pattern off last week’s highs. While these triangle formations will often be continuation patterns, we’ll remain nimble on a breach scenario and a run on that record high may be on the cards before turning over.

Bottom line: although the broader bias remains weighted to the topside, near-term the pair remains vulnerable below key resistance at 8841/51 and we’ll look to play the breakout of this consolidation pattern. A break below near-term support at 8790 shifts the focus lower heading into the close of the week with objectives eyed at channel support and the monthly range low at 8712. We will reserve this as our medium-term bullish invalidation with a break below suggesting a more significant high may have been put in last week. A breach/close above the July high keeps the topside bias in play with targets eyeing fresh record highs around 8911 and 8973.

Keep in mind the daily ATR is rather tight here and as such we’ll remain nimble ahead of the weekly range break / major event risk. 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

Resistance Target 1

30min

8806

23.6% Retracement / European ORL

Resistance Target 2

30min

8825

1.618% Ext / Weekly ORH

Bearish Invalidation

Daily / 30min

8841/51

2011 High / 61.8% Extension

Break Target 1

Daily

8911

100% Extension

Break Target 2

Daily

8973

78.6% Extension

Break Target 3

Daily

9129

100% Extension

Bullish Invalidation

Daily / 30min

8788/90

100% & 1.618% Ext(s) / 38.2% Retrace / July ORH

Break Target 1

30min

8774

50% Retracement

Break Target 2

30min

8759

61.8% Retracement

Break Target 3

30min

8740

78.6% Retracement

Break Target 4

Daily / 30min

8712

July ORL

Break Target 5

Daily

8669

38.2% Retracement / Pivot

Break Target 6

Daily

8618

50% Retracement

Average True Range

Daily (20)

49

Profit Targets 13-15pips

*ORH: Opening Range High

*ORL: Opening Range Low

Other Setups in Play:

---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 Tuesday – Thursday on DailyFX Plus (Exclusive of Live Clients) at 1500 GMT (11ET)

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