Talking Points
- NZDUSD weekly opening range in focus ahead of RBNZ- broader risk lower sub-7160
- Updated targets & invalidation levels
- Looking for more trade ideas? Review DailyFX’s 2017 Trading Guides. Join Michael for Live Weekly Trading Webinars on Mondays at 13:30GMT (8:30ET)
NZDUSD 240min
Technical Outlook:The RBNZ interest rate decision is on tap in just a few hours and heading into the release the focus is on the 7010-7075 weekly opening range. Our broader outlook remains weighted to the short-side while below the upper median-line parallel / 75% line (currently ~7160s – note the 200-day moving average stands at 7151) with a break sub 6952 needed to mark a more meaningful reversal in the pair.
From a trading standpoint, I’d be looking to fade a knee-jerk reaction higher into structural resistance near the upper parallel with a break lower targeting 6900, 6861 & the 2016 open at 6828. Keep in mind that the central bank is widely expected to hold the official cash rate at 1.75% and as such, the focus will be on the accompanying commentary as it pertains to the growth outlook and signs that the underlying inflation pressures are lifting. That said, any shift in tone from Governor Wheeler could fuel some volatility here so look for the initial reaction to offer clues. A breach / close above 7200 would be needed to keep a long-bias in play and mark a more prominent breakout in the pair
- A summary of the DailyFX Speculative Sentiment Index (SSI) shows traders are net-long NZDUSD- the ratio stands at +1.1 (52.4% of traders are long)- weak bearish reading
- Traders have been net-long since March 2nd when Kiwi was trading near 7116- Since then, the pair has fallen 1.2% lower
- Long positions are 13% lower than yesterday and 32.3% lower from last week
- Short positions are 20.2% higher than yesterday and 28.2% higher from last week
- While SSI continues to point lower, it’s important to note that the recent build in short exposure has seen the ratio come off considerably from recent extremes seen this month and leaves the broader short-bias at risk heading into today’s release.
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Relevant Data Releases
Other Setups in Play:
- AUD/USD Revisits Multi-Month Resistance
- NZD/CAD Rebound to Offer Favorable Entries- 9500 Key Resistance
- Strategy Webinar: Rate-Hike Drop Exposes U.S. Dollar Vulnerability
- EURUSD: Post-FOMC Rally at Initial Resistance
- DXY Poised For Yellen: Here’s the FOMC Game Plan
- Written by Michael Boutros, Currency Strategist with DailyFX
Follow Michael on Twitter @MBForex contact him at mboutros@dailyfx.com or Click Here to be added to his email distribution list.
