Hello Traders,
Last week’s Core CPI and CPI data came in unchanged just like in October. Inflation of consumer goods was unchanged at 0.2% and 0.1% below what the consensus was and even though it was lower than expectation, there was a continued weakness in the NZD throughout the NY session. To confirm this weakness, the market opened 25 pips lower at 0.9431 and continued to confirm our bearish rally.
What is important to note is the relevance of the 0.9580 level, at four different occasions has price reversed from these price tag meaning at this level price is almost always overpriced and correct re-pricing mechanism had to come in play. To add to this point, the RBNZ cut interest rates to spur inflation towards their 1.5% target meaning further weakness is expected. I was waiting for a double bar reversal which happened a fortnight ago when that candled closed at 0.9627 and a last week’s candle was a confirmation candle closing in as a strong bear candle at 0.9463-that is almost 180 pips below 0.9627. Note two things that is happening at the monthly chart- there is a strong volume reduction with the OBV turning up with a negative slope and secondly, there is a sell signal which has printed accompanied by a long upper wick-this means the selling pressure is strong and now matter what happens, this month will close as a bear candle with a long upper wick. Also, note how price is reversing at this all time highs which were reached at 1997 in the monthly chart. Every time price reversed from these levels expect it to decline for the next 4 years, so if you got it right at my previous post expect to ride this through 2020-quite ambitious but those are facts. What’s even interesting is how the price of oil is attempting to break above the $52/Barrel price-there has been a 7 month horizontal consolidation with no volume addition for this commodity. The monthly stochastics is skewed towards a break to the upside and especially a break above the $52 resistance. Look at how Gazprom-GAZP MOEX and Schlumburger-SLB NYSE stocks are performing in the stock market, just stellar over the past two months.
The weekly chart closed below the 20 day moving average after price showed an overextension, this was mirrored in the daily chart which has continued to slump for 8 consecutive days. Remember, daily candle sticks are leaning towards a lower BB hugging and if it does it’s an indication of a high momentum and bear trend continuation. The wisest thing to do is to look at the 4HR chart for short term continuation in the 15 min chart and look to enter short when it is overbought, right now there is an oversold stochastics and the path of least resistance is NZD strength through Tuesday or Wednesday when there might be an overbought stochastics and a bear candle confirmation. Entry will be in the 15 minute charts as always. If there is a buy signal in the daily chart, then wait till there is a sell signal there. Remember a high time frame trend nullifies short time frame trends, daily charts bear/bullish trend nullifies 4HR bear/bullish trends and so on. If there is a bullish congruence in both daily and 4HR chart, then wait till a sell signal is printed in the stochastics.
Today’s strategy will be as follows, entries being in the 4HR chart:
Trade 1:
Sell Limit: 0.9500
Stop Loss: 0.9580
Take Profit: Trail your profits with 80 pip stop loss-Daily range is 80 pips average.
Trade 2:
Sell Limit: 0.9580
Stop Loss: 0.9660
Take Profit: Trail your profits with 80 pip stop loss-Daily range is 80 pips average.
Otherwise, have a good trading day.

GAZP Monthly chart-21.11.2016

Source: Dalmas Ngetich

NZD 4HR chart-21.11.2016

Source: Dalmas Ngetich

NZDCAD Monthly chart-21.11.2016

Source: Dalmas Ngetich

NZDCAD Weekly chart-21.11.2016

Source: Dalmas Ngetich

Oil Monthly chart-21.11.2016

Source: Dalmas Ngetich

Oil Weekly chart-21.11.2016

Source: Dalmas Ngetich

SLB Monthly chart-21.11.2016

Source: Dalmas Ngetich

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