- Kiwi caught in key near-term range ahead of FOMC- Breakout to offer opportunity
- Updated targets & invalidation levels
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Technical Outlook:Kiwi has been trading within the confines of a well-defined descending pitchfork formation off the 2016/2017 highs with near-term price action trapped in a technical range between 6861-6972. I’ll be looking for a break of this range heading into tomorrow’s highly anticipated FOMC interest rate decision with our broader focus weighted to the downside while below the 50-line / October lows at 7035 (bearish invalidation). A break of support risks a drop into the lower parallel (red), backed by the 100% extension at 6752 & the 61.8% retracement at 6714 (key support).
Notes: A closer look at price action shows kiwi carving out its weekly opening-rang just below key near-term resistance at 6952/72. Note that the pair marked divergence into last week’s lows and we can’t rule out a relief rally off confluence support before resuming lower.
My gut says we’ll probably see some upside from here but from a trading standpoint I’ll favor fading strength sub-7036/45. A downside break targets subsequent support objectives into the lower parallels - a decline into the 67-region would offer an area of interest for possible exhaustion / long-entries. Keep in mind the focus tomorrow will be on the path of future rate hikes with the markets currently pricing three hikes this year. Look to the updated quarterly projections and interest rate dot plot to drive USD price action.
Relevant Data Releases
Other Setups in Play:
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- Written by Michael Boutros, Currency Strategist with DailyFX