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NZD/USD: Bearish Bias Intact as FX Sentiment Narrows Ahead of GDP

NZD/USD: Bearish Bias Intact as FX Sentiment Narrows Ahead of GDP

Talking Points

  • NZDUSD breaks key near-term support
  • Updated targets & invalidation levels

NZDUSD 120min

Chart Created Using TradingView

Technical Outlook: Last week I highlighted a critical resistance range in NZDUSD at 7481-7515 with our bias waited to the downside into the close of the week. We’ve continued to track this setup on SB Trade Desk and heading into tomorrow’s New Zealand GDP release the risk remains for further losses after breaking key confluence support today at 7292/95.

The focus remains lower while below this level with subsequent support targets eyed at the monthly open (7249), 7218 & the key 61.8% retracement at 7155. From a trading standpoint, heading into the data release I would be looking to fade strength sub-7300.For the complete setup and to continue tracking this trade & more throughout the week- Subscribe to SB Trade Desk.

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  • A summary of the DailyFX Speculative Sentiment Index (SSI) shows traders are net shortNZDUSD- the ratio stands at -1.31 (43% of traders are long)- weak bullish reading
  • Long positions are 24.2% above levels seen last week while Short positions are 45.4% lower over the same time period.
  • Open interest is 23.1% lower than yesterday and 21.5% below its monthly average
  • The dramatic drop in short positioning on waning open interest suggests traders are booking profits ahead of tomorrow’s data release. That said, a more dynamic shift in retail sentiment (to net-long) would suggest further losses for the kiwi as SSI comes off recent extremes not seen since the exchange rate peaked in July 2014.

Help fine-tune you entries, click here to learn more about the DailyFX Grid Sight Index (GSI)

Relevant Data Releases This Week

Other Setups in Play:

Looking for more trade ideas? Review DailyFX’s Top Trading Opportunity of 2016

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

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DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.