Compared to the previous week, the average price of dairy products jumped 12.6% to $2731 per MT and as a result we saw that sharp rise of NZD-jumped by approximately 25 pips in the NY session after chopping around for some time. This was also not the only good news, we saw that the labor conditions also significantly improved largely because of changes in survey strategies that included self employed and defense personnel counted as part of the labour force. Of note was the participation rate which rose to 69.7% from 68.8% a quarter ago. This is partly because of the increased number of immigrants who are seeking employment and keeping wages down and therefore impacting of the goal towards driving inflation rates to the ideal 1.5% level. With this kind of robust data, growth in the next two quarters is expected to accelerate.
To the charts now and we are seeing a completely opposite picture. Price action has been moving up and encouragingly targeting the resistance trendline visible in the daily chart. After the news release, it seems like selling pressure increased and price reversed back to the current 0.725 level. I’m holding my shorts at the moment looking at how that bearish divergence developing in the 4HR and daily charts-prices are making higher highs while stochastics are trending lower-will impact on the general trend.
My view for today is to short at all highs-preferably with a small lot size- and follow this with a stop loss at 0.735-which is at 11.08.2016 highs, place it just above that whipsaw in the daily chart.
Look to sell in the 15 Min chart around the 23.6 Daily Fibonacci level at around-0.727-0.728 with your target being the 100 and 161.8 Fibonacci level if you are a day trader. Notice the considerable consolidation around this level in the 15 min chart before price collapsed in the Asian session.
Trade plan as below:
Sell Limit: 0.727-0728
TP: 0.72 for day trading and 0.705 for swing traders.
Have a good trading day.