After yesterday’s explosion of the NZD, we are
seeing a more settled market with price action moving within a narrow channel,
between the 261.8 and 161.8 Fibonacci levels-from Wednesday’s Hi-Lo. To top this
up, no major news were released from both economies to warrant a move up or
down. We saw the unemployment claims print an improved value at 264K against
last week’s 268K and marked the 66th week in a row when unemployment
claims has been below 300K, the best since 1973. Also released, though not much
of significance is the Wholesale inventories, which is taken into consideration
when calculating the GDP, it showed an increase in inventory at 0.6% in April,
and a rise from 0.1% which was recorded in March. This provides a subtle hint
that the second quarter GDP will improve coupled by increasing sales and
reducing timeframe to clear shelves from 1.36 to 1.35 months. Now to the
Daily Chart Analysis
It seems all action was in the Wednesday’s NY and
Asian sessions when all accounts are taken, we only saw a little selling
pressure late in yesterday’s NY session and that little upper wick was formed.
Other than that, nothing major on the offing and because it will take a
considerable amount of time for trend to change technically unless a
fundamental event takes place, we shall continue to hold our longs in this
timeframe until there is an obvious reversal signal in the weekly charts. But
for now, stochastics, OBV and BB are signaling a trend continuation and well,
since there is no other fundamental news other than the Preliminary UOM
sentiment at 1400GMT at 94.1e from May’s 94.7 and the Federal Budget Balance at
1800GMT at -56.2Be from last month’s 106.5B recorded last month.
After yesterday spike, price has corrected down
and is slowly moving back towards the 50% Yearly Fibonacci level. This is
supported clearly by the stochastics and OBV which is swinging in from the
overbought region. Prices are also making a series of lower highs and lower
lows in respect to the upper BB. This is expected because this week has been
purely bullish. If Fibonacci levels is drawn from this week’s Hi-Lo, this
yearly 50% Fibonacci level forms a confluence with this week’s 50% Fibonacci
level, this therefore forms a strong support. Set a buy limit at 0.704 with
targets at the weekly 161.8 Fibonacci extension level at 0.728.
Min Chart Analysis
There was no significant movement in the Asian
session with prices moving lower by 20 pips and correcting back by 38.2% back
to the 0.709 level. We expect prices will trend even lower in the European and
NY session so therefore look to sell at todays high printed at 0.712 with our
targets being at 0.704, some pips from where the price is trending at with our
stop loss being at 0.715. At the moment, there is a formation of a strong buy
signal, we therefore have to wait for stochastics and OBV to print a sell
signal in the overbought region and initiate some sell positions.
Have a pipful day and a great weekend.
About The Post
About The Forex Analyst
I have been trading Forex and commodities for the past 3 years. [email protected] for further discussions.