NZD/USD Outlook Bearish Below 7150 Ahead of US 3Q GDP

2016-11-28 19:47:00

Talking Points

NZD/USD near-term recovery at risk ahead of key US data
Updated targets & invalidation levels
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Technical Outlook: NZD/USD has been following these well-defined slope lines derived off the yearly highs with the pair rebounding off the lower parallel late last week. The break below basic channel support extending off the January low earlier in the month keeps the focus lower while below confluence resistance at 7136/50- this region is defined by the 38.2% retracement & the November open and converges on former channel support (now resistance) over the next few days.

Interim support rests at 7035 backed by more a more significant confluence down at 6955/70 where the Brexit low converges on the 100% extension of the decline and the lower parallel. A break below this level targets subsequent support objectives at 6916 & the 2016 open at 6828. A breach above highlighted resistance risks a more meaningful recovery with such a scenario eying topside targets at 7187, 7238 & 7295.

Data is light out of New Zealand this week (Wheeler speaks before Parliament Select Committee on 11/30) so we’ll be looking for U.S. event risk to drive intraday price here. Heading into tomorrow’s 3Q GDP revisions and subsequent Consumer Confidence release, we’ll be looking to fade strength while below the median-line.

A summary of the DailyFX Speculative Sentiment Index (SSI) shows traders are net long NZD/USD- the ratio stands at +1.35 (57% of traders are long)- weak bearish reading
Long positions are 2.5% lower than yesterday and 4.3% above levels seen last week
Short positions are 9.0% lower than yesterday but 0.7% above levels seen last week
Open interest remains subdued at 1.6% below its monthly average
While the current SSI profile remains bearish, it’s worth noting that sentiment has continued to pullback from the 2016 extreme of +1.78 registered on November 18th. As such the near-term rebound may have some more upside before turning over with our focus weighted to the downside while below the monthly open.

Relevant Data Releases