Talking Points

NZD/USD 120min

NZD/USD 120min Chart

Technical Outlook: Kiwi posted an outside day reversal off median-line resistance yesterday with the decline breaking below the lower parallel of the ascending pitchfork extending off the December / January lows. On face value, the pair has simply set a well-defined weekly opening range and heading into the RBNZ interest rate decision, the risk remains lower while below confluence resistance at 7352 with a break below 7254 needed to validate a near-term reversal. Subsequent support targets are eyed at 7200, 7179& the lower parallel (~7150s).

A breach above the upper parallel invalidates the reversal play with such a scenario targeting confluence resistance at the 74-handle (also an area of interest for near-term exhaustion). Keep in mind the central bank is widely expected to maintain its current policy stance and the focus will be on the accompanying commentary as a pick-up in inflation is counter-balanced by sluggish wage / job growth.

NZD/USD Coils as Traders Await RBNZ – Levels to Know
  • A summary of the DailyFX Speculative Sentiment Index (SSI) shows traders are short NZDUSD- the ratio stands at -1.86 (35% of traders are long)- weak bullishreading
  • Long positions are 0.6% lower than yesterday and 5.6% below levels seen last week
  • Short positions are 5.8% higher than yesterday and 3.4% above levels seen last week
  • Open interest is 3.5% higher than yesterday and 9.41% above its monthly average
  • While the current SSI profile continues to point higher, it’s worth noting that the ratio has continued to narrow from a 2017 extreme of -2.51 and leaves the long-side vulnerable near-term. Look for a build in long positioning in the coming days for further evidence that the pair may be poised for a more meaningful pullback

Relevant Data Releases

NZD/USD Coils as Traders Await RBNZ – Levels to Know

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 mboutros@dailyfx.com or Click Here to be added to his email distribution list.