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NZD/USD Breakout or Fake-out? NZ Employment to Offer Cues

NZD/USD Breakout or Fake-out? NZ Employment to Offer Cues

2017-01-31 18:04:00
Michael Boutros, Strategist

Talking Points

NZD/USD 240min

NZD/USD 240min Chart

Technical Outlook: Last week we discussed the significance of the 7292/93 resistance zone with the long-bias vulnerable while below this region.Kiwi broke above this threshold today in European trade with the rally responding to a key near-term resistance confluence at 7350/52- a region defined by the upper median-line parallel & the 78.6% retracement of decline off the 2016 high.

A close above 7300 is needed to keep the long-bias in focus with our bullish invalidation level set to the highlighted confluence support zone around 7235(weekly opening range low, 23.6% retracement & slope support). A breach higher targets longer-term slope resistance 7380 & 7400. More significant resistance is eyed at the 2016 high-day close at 7450.

Bottom line, heading into tonight’s New Zealand employment report, the broader risk remains weighted to the topside while within this formation, but don’t rule out a test of structural support before heading higher. From a trading standpoint, I would be interested in fading a spike higher into 7400 OR fading weakness into the lower parallels, targeting a new high.

  • A summary of the DailyFX Speculative Sentiment Index (SSI) shows traders are short NZD/USD - the ratio stands at -2.31 (30% of traders are long)- bullish reading
  • Long positions are 14.3% lower than yesterday and 10.8% below levels seen last week
  • Short positions are 9.1% higher than yesterday and 20.1% above levels seen last week
  • Open interest is 0.8% higher than yesterday and 13.7% above its monthly average
  • The current dynamic of increasing short positioning alongside building open interest continues to point higher in Kiwi. Note that SSI hit an extreme of -3.32 in September as the pair topped- Look for a continued build in shorts in the coming days to further validate our near-term directional bias.

Relevant Data Releases

NZD/USD Breakout or Fake-out? NZ Employment to Offer Cues

Looking for trade ideas? Review DailyFX’s 2017 1Q Projections

Other Setups in Play:

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

Follow Michaelon Twitter @MBForex contact him at or Click Here to be added to his email distribution list.

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