News & Analysis at your fingertips.

We use a range of cookies to give you the best possible browsing experience. By continuing to use this website, you agree to our use of cookies.
You can learn more about our cookie policy here, or by following the link at the bottom of any page on our site. See our updated Privacy Policy here.

0

Notifications

Notifications below are based on filters which can be adjusted via Economic and Webinar Calendar pages.

Live Webinar

Live Webinar Events

0

Economic Calendar

Economic Calendar Events

0
Free Trading Guides
Subscribe
Please try again
EUR/USD
Bearish
Oil - US Crude
Bullish
Wall Street
Bearish
Gold
Bullish
GBP/USD
Bearish
USD/JPY
Bearish
More View more
Real Time News
  • (Weekly Fundamental) Euro Forecast: EUR/USD May Struggle if Dovish ECB Talks Numb Data Reactions #Euro $EURUSD #ECB https://www.dailyfx.com/forex/fundamental/forecast/weekly/eur/2021/05/16/Euro-Forecast-EURUSD-May-Struggle-if-Dovish-ECB-Talks-Numb-Data-Reactions.html?CHID=9&QPID=917702&utm_source=Twitter&utm_medium=Dubrovsky&utm_campaign=twr https://t.co/Q05G9ntHAB
  • Forex Update: As of 20:00, these are your best and worst performers based on the London trading schedule: 🇬🇧GBP: 0.29% 🇨🇦CAD: 0.28% 🇯🇵JPY: 0.10% 🇦🇺AUD: -0.20% 🇨🇭CHF: -0.21% 🇳🇿NZD: -0.54% View the performance of all markets via https://www.dailyfx.com/forex-rates#currencies https://t.co/hY1rIY00Wf
  • Commodities Update: As of 20:00, these are your best and worst performers based on the London trading schedule: Silver: 2.72% Gold: 1.21% Oil - US Crude: 0.17% View the performance of all markets via https://www.dailyfx.com/forex-rates#commodities https://t.co/ctV0Z1yKJk
  • Silver leading precious metals higher on Monday, trading back above $28/oz $XAGUSD https://t.co/rx8EKBzteh
  • Greed is a natural human emotion that affects individuals to varying degrees. Unfortunately, when viewed in the context of trading, greed has proven to be a hindrance more often than it has assisted traders. Learn how to control greed in trading here: https://t.co/kODPAfJE79 https://t.co/WICL9s0gtT
  • IG Client Sentiment Update: Our data shows the vast majority of traders in Silver are long at 88.10%, while traders in Germany 30 are at opposite extremes with 74.63%. See the summary chart below and full details and charts on DailyFX: https://www.dailyfx.com/sentiment https://t.co/HSWBoEtMLf
  • A big day for $Gold Gold spent > than nine months in this bearish channel, building as a bull flag. At the time: - Bitcoin was below $12k - Ethereum was below $400 - Doge was worth about 1/3rd of 1 cent The only true constant is change https://t.co/igOIe9axdf https://t.co/4tzQQzdB0P
  • 🇺🇸 Overall Net Capital Flows (MAR) Actual: $146.4B Previous: $73.7B https://www.dailyfx.com/economic-calendar#2021-05-17
  • 🇺🇸 Foreign Bond Investment (MAR) Actual: $118.9B Previous: $-65.5B https://www.dailyfx.com/economic-calendar#2021-05-17
  • Indices Update: As of 20:00, these are your best and worst performers based on the London trading schedule: FTSE 100: 0.31% France 40: 0.25% Germany 30: 0.16% Wall Street: -0.01% US 500: -0.01% View the performance of all markets via https://www.dailyfx.com/forex-rates#indices https://t.co/2O0aGnwxiF
NZD/USD Carves Out a Clean Reversal Pattern But Can It Catalyze a Turn?

NZD/USD Carves Out a Clean Reversal Pattern But Can It Catalyze a Turn?

John Kicklighter, Chief Strategist

What happens when a path-of-least-resistance happens to follow the lines of a head-and-shoulders reversal? NZD/USD has shaped out a congestion pattern following a multi-month tumble and a natural range move could spell a large market swing.

Talking Points:

  • NZD/USD has developed a congestion pattern over the past few months that stands as a clear inverse head-and-shoulders pattern
  • Despite a general risk appetite building that has reached far for any and all yield over years, the Kiwi remains very low
  • While a reversal with trend implications is difficult to foster in these markets, a NZD/USD turn would be a wide range move

See how retail traders are positioning in NZD/USD intraday using the DailyFX speculative positioning data on the sentiment page.

It is difficult to charge breakouts with follow through in these market conditions. It is even more troublesome to forge lasting trends. That is due to oversaturation of risk appetite throughout the financial system coupled with the strong feeling of skepticism that has followed in our exposure's wake. Add to this situation a seasonal expectation for volume and volatility to significantly deteriorate as December wears on, and the hurdles are high. Extending or reversing mature trends is equally unlikely in sheer probabilistic terms. With that being said, we should keep tabs on those markets, assets and currencies that face high profile event risk or can follow a path of least resistance.

From NZD/USD, there is better potential than many to generate a medium-term move. While it could certainly break clear of a multi-year support (bearish), the impetus for such a move would be far greater and likely in the Dollar's camp. Yet, technical analysts will recognize a multi-month inverse head-and-shoulders pattern that has formed. Traditionally, these are technical patterns that point to greater potential for reversal. With a neckline of 0.6925, a break would prove both reversal and a broad range swing. While we have seen the natural pull to moderate extreme market moves pushed off repeatedly this year, there is nevertheless a speculative motivation to follow a path of least resistance.

From a fundamental perspective, the potential has swung more firmly in the favor of a turn if a definitive break and follow through were to develop at all. From the Kiwi Dollar's perspective, one of the primary carry currencies among the FX majors has maintained a hefty discount despite a stretch for yield that has afforded a premium to currencies whose rates are at zero or even negative. This is in part due to the greater appeal of a change in interest rates rather than parking capital in historically low carry scenarios. It is also a unique situation to the New Zealand Dollar whereby the RBNZ's reversal on its policy from hikes through 2014 to a position of jettisoning off promise of eight additional quarter percent hikes and then on to actual cuts still lingers. For the US Dollar, the potential for a strong rebound from 2017's wide tumble has faded dramatically as the potential for a faster pace of tightening from the Fed, collective weakness from major counterparts and political stability to afford local growth have all faltered. We discuss the potential in the NZD/USD and why it should be kept on our radar despite seasonal expectations in today's Quick Take Video.

To receive John’s analysis directly via email, please SIGN UP HERE.

NZD/USD Carves Out a Clean Reversal Pattern But Can It Catalyze a Turn?NZD/USD Carves Out a Clean Reversal Pattern But Can It Catalyze a Turn?NZD/USD Carves Out a Clean Reversal Pattern But Can It Catalyze a Turn?

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

DISCLOSURES