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NZD/USD Breakdown Continues Ahead of NFP

NZD/USD Breakdown Continues Ahead of NFP

2017-05-04 14:30:00
Walker England, Forex Trading Instructor
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Talking Points:

The NZD/USD is declining for the second consecutive session this week, falling as much as 125 pips from Wednesday’s high of .6968. This fall in price comes ahead of tomorrow’s NFP (Non-farm Payrolls) data release. Expectations for the event are set at 190k, and as a high importance event has the ability to add increased volatility to trending US Dollar pairs.

Technically the NZD/USD is trending lower in both the short and long term. Prices remain well below the pairs 200 day MVA (simple moving average) which is now found at .7106. As well, the NZD/USD is now trading back below its 10 day EMA (exponential moving average) at .6913. If the trend continues lower, traders may continue to reference both of these points as ongoing values of resistance. In the event that prices begin to reverse higher on tomorrow’s news, traders should first look for prices to trade over .6900 and then attempt to close above the displayed 10 day EMA. A move of this nature would signal a shift in short term momentum, allowing prices to then potentially retest weekly highs above .6969.

NZD/USD, Daily Chart with averages

NZD/USD Breakdown Continues Ahead of NFP

(Created Using IG Charts)

Intraday analysis now has the NZD/USD attempting to breakout below its S1 pivot at .6849. If prices continue to slide, the next values of support may be identified at the S2 and S3 pivots seen below at .6807 and .6748. If prices rebound intraday, traders should first look for prices to pass through the S1 pivot and then breach today’s central pivot at .6908. A move through .6908 should be seen as significant, and would then open up the pair to test the next value or resistance. Resistance can be identified in the graph below at the R1 pivot found at .6950.

NZD/USD, 30 Minute Chart with Pivots

NZD/USD Breakdown Continues Ahead of NFP

(Created Using IG Charts)

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Going into tomorrow’s NFP event, sentiment for the NZD/USD remains at extremes. Currently IG Client Sentiment (IGCS) reads at +2.09, with 67.6% of traders currently net-long. Typically sentiment is read as a contrarian indicator, which would suggest that the NZD/USD may be prepared to continue trending lower. In the event that prices do trend lower, IGCS may push to further extremes to end this week’s trading. Alternatively if prices bounce on tomorrow’s news, sentiment figures may shift in the short term back towards more neutral readings.

NZD/USD Breakdown Continues Ahead of NFP

--- Written by Walker, Analyst for DailyFX.com

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