Talking Points
- NZD/USD vulnerable heading into RBNZ- key resistance 7292/96
- Updated targets & invalidation levels
NZDUSD 60min
Chart Created Using TradingView
Technical Outlook: We presented this setup last night on SB Trade Desk and heading into the RBNZ interest rate decision, the kiwi remains vulnerable while below a key resistance threshold at 7292/96 – a region defined by the 2016 high-day & the March 2015 low-day closes. The pair is holding within the confines of a newly identified ascending pitchfork extending off the July low with the median-line catching today’s high.
Look for interim support at the monthly open at 7200 backed by 7180 & 7155. A break below this level would be needed to validate a more significant reversal targeting the weekly open at 7129, 7103 & the 61.8% retracement at 7067. Interim resistance stands at 7227 backed by the median-line & 7292/96.
From a trading standpoint, I would be looking to fade kiwi strength on an RBNZ rip higher while below key resistance. Ultimately the decline may offer better long-opportunities down near the 69-handle. A breach above 7300 keeps the long-bias in play with such a scenario targeting 7325, 7379/92. For the complete setup and to continue tracking this trade& more throughout the week- Subscribe to SB Trade Deskand take advantage of the DailyFX New Subscriber Discount.
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- A summary of the DailyFX Speculative Sentiment Index (SSI) shows traders are net short NZDUSD- the ratio stands at -2.29(30% of traders are long)-bullishreading
- Yesterday the ratio was -1.61 - Short positions are 24.3% higher than yesterday and 40.5% above levels seen last week.
- Open interest is 10.2% higher than yesterday and 16.2% above its monthly average
- Retail sentiment is approaching the most extreme read of 2016 – last time we were at these levels was on July 8th (July 12th was the high in price)
- Although an uptick short-exposure on building open interest would typically be bullish signal, I would use caution with that interpretation heading into the release as the advance approaches key resistance. This leaves room for a possible rip higher into the release before turning over.
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Relevant Data Releases This Week
Other Setups in Play:
- USDCAD Advance Vulnerable Sub 1.3186 - Look Lower to Get Long
- EUR/USD Susceptible to NFP Pullback- Constructive Above 1.1060
- GBP/USD Rally to Face BoE- Outlook Remains Constructive Above 1.3160
- GBP/JPY Bound to Support Before BoE
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---Written by Michael Boutros, Currency Strategist with DailyFX
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