NZDUSD Rally at Risk Sub 7975- Scalps Target Near-term Correction
- NZDUSD rally at risk near-term sub-7970
- Scalps target downside correction / long entries lower down
- Event risk on tap this week
Chart Created Using FXCM Marketscope 2.0
- NZDUSD medium-term bias shifted higher after 11/12 breach of monthly opening range high
- Trading within ascending pitchfork formation- constructive above pitchfork support
- Now testing median line resistance / R1 monthly pivot- interim bearish invalidation 7972
- Support at monthly central pivot 7840/47 & 7780- bullish invalidation
- Pullback to offer favorable long entries with breach of resistance targeting 8050 & 8108/22
- Daily RSI divergence seen at the lows / resistance trigger break- constructive
- Event Risk Ahead: New Zealand PPI tomorrow & US CPI on Thursday
Notes: On the third of November we noted that kiwi had come into a major level of support at the 2013 lows with our bias to sell rallies while below 7800. The pair pushed into a new low at 7660 before rebounding sharply through the monthly opening range high- shifting our medium-term focus back to the topside.
Intra-week divergence at the weekly opening range high just below the 1.618% extension of the advance off the monthly lows has us looking lower near-term against 7975. Look for a break of this embedded pitchfork to open up short scalps into the weekly opening range lows / support at 7891-7900 & 7840/47 where we would start to look for more favorable long entries.
Bottom line: looking to sell rallies while below 7975 with a move below the weekly opening range low offering further validation for our near-term directional bias. Keep in mind that the monthly opening range broke last week with the breach above 7840 and the broader tendency is to buy pullbacks in the kiwi heading into the latter part of the month while above that level. Use caution heading into the close of the week with inflation data out of the US likely to fuel added volatility in USD based pairs.
* 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 Economic Releases
Other Setups in Play:
- EURJPY Rally at Risk sub 1.4450- Short Scalps Eye Weekly Lows
- Scalping the AUDUSD Reversal- Longs Favored Above 8600
- EURUSD Scalps Target 1.26 Ahead of ECB / NFPs
- USDJPY Presses Resistance Ahead of BoJ- Support at 108.87
---Written by Michael Boutros, Currency Strategist with DailyFX
For updates on this scalp and more setups follow him on Twitter @MBForex
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