Early today the NZ Business Manufacturing PMI was released at 57.7 for the month of June marking a continuous expansion and confidence of New Zealand manufacturing sector over the past year-when January was of course at a penultimate high of 58. For an economy where manufacturing contributes about 12% of its GDP, this comes as good news to everyone involved and especially when it comes to driving up inflation to the ideal 1.5% mark. Increase in manufacturing means that there is more spending and confidence in the economy a fact which was shown last month when credit card spending rose by 1.2% in June. In other economic news, there will be rate announcement today by Mark Carney and this will surely cause some volatility and capital flight to safe havens like Gold, Yen and Treasury bills. So let’s brace ourselves for that today at 11:00 GMT.
To the charts:
On the weekly chart, our target was at the 23.6 Fibonacci level but price action is reversing faster than anticipated for this pair and now there is a strong price reversal at the 38.2 Yearly Fibonacci level after 4 trading days where price has been choppy. In my opinion, weak employment data from Australia triggered some sell off in the Asian session and we shall take advantage of that weakness and sell off the kiwi while riding with the trend.
Technically, price is making a series of lower lows and higher lows relative to the upper BB with the stochastics moving in from the overbought territory. There is also a relative decrease of longs when OBV is taken into consideration.
This means one thing-we sell and we achieve that as follows:
Since the Asian session was bearish, we expect some correction in the European session and therefore we shall look only to sell before 11:00 AM GMT today from all sell signals in the 15 Minute charts before Carney announcement. This will be the probable sell limits:
Sell limit-0.725-0.726(Between the 100 and 61.8 Fibonacci level from yesterday’s Hi-Lo)
SL-0.73-with a trailing stop.
Take Profit-0.69(long term support in the daily chart)
Have a good trading day.