Today is a US bank holiday and as because of that the volatility in the European session is expected to be low and anyway there are no major economic news expected from the States. Now to the real issues, tomorrow we expect important events to begin with the UK conservative party selecting its new leader and then of course, the Financial Stability Result from the bank of England. Earlier today we also saw the building approvals from Australia and with voting that took place on Sunday, the Aussie opened with a gap down so did the kiwi with approximately 15 pip gap down.
We expect the market to stabilize this week and we go back to depending on economic releases and monetary policies after the aftermath of Brexit and in the case therefore we shall look on the Fed’s minutes on meeting on Wednesday and then NFP on Friday while not forgetting the rate decision by the RBA on Tuesday-where rate is expected to remain constant at 1.75%.
For the kiwi, well-it has been grinding higher and the ceiling remains at 0.728 which is at the resistance and a key support level for March last year in the weekly chart. Technically speaking, the stochastics are oversold in this level-in the weekly charts and so is it in the 4HR chart but we remain cautious until a reversal signal is formed in the 4 HR chart. As observed from the chart, this expected reaction points is coincident with this year’s high and reversal point.
So for now we remain neutral only until a reversal double bar pattern forms in or around the blue zone and in the 161.8 Fibonacci extension confluence level.