Yesterday we had our pending orders positioned at 0.731 but despite the good quarterly retail sales-at 2.3% which beat expectations at 1.0%, the Kiwi failed to rally past the 0.723 mark but instead reversed and is now trending below the 0.72 mark. Technically speaking we are in for a major reversal after that conspicuous inverted hammer which formed yesterday. We hint that today’s US Retail sales will beat expectations and price will even trend lower-Monthly Retail sales is expected to be at 0.4% from July’s 0.6%, Core Retail Sales expected to rise by 0.2% from last month’s 0.7% and PPI to print 0.1% against 0.5% increase for last month. Check this out at 1230GMT today. With the release of New Zealand’s retail sales, it only points that-as stated in yesterday’s RBNZ statement, tradable inflation is not a concern because of the rising retail sales but the relatively strong NZD is affecting inflation and keeping it below the 1.5% target. With chances of intervention, NZD shall trend lower.
In the charts, that inverted hammer which formed at the resistance trend line not only closed below the resistance zone but also had a long upper wick which signals selling pressure. Also check out the reversals from the yearly 38.2% Fibonacci level. In the secondary window there, we see a receding volume as shown by OBV meaning also the buy momentum has decreased and therefore prices should trend lower.
Our strategy for today will be as follows, in the 15 min chart-look to sell at the 38.2 Yearly Fibo level or at the 68.2% Fibo level from yesterday’s Hi-Lo. At the moment, price is trending higher and this is expected as the Asian session was relatively bearish. Look to initiate at these recommended positions and these probable price levels:
Sell Limit: 0.7235-0.7245
Stop Loss: 0.7285
Have a good trading day and weekend.