With the NFP expected later today, the market is trending cautiously. NZDUSD is particularly back to its normal trading range and yesterday it oscillated between 0.689 and 0.697 regions, representing a pip range of about 75. We however look at the behavior of this pair both from the fundamental and technical perspective with earlier news today that the US is almost at its full employment but exercised caution because of the low inflation. This claim of low inflation was cemented with yesterday unemployment claims rising to 277K from forecasted 266K, however, let’s wait and see the unemployment rates and specifically the Average earnings for last month as they are factors that can determine the short term inflation.
Let’s look at today’s charts:
Daily Chart Analysis
Yesterday’s candlestick remained relatively bearish and formed above the BB upper band with a strong selling pressure forming that inverted hammer and closing above the current resistant line. Formation of this candlestick formation especially outside the upper BB always indicates that price is stretched and a reversal is imminent. A look at stochastics and OBV also shows a short term volume reduction with the stochastics forming at the overbought regions.
Fed rep Evans said that the US is closed to reaching full employment and they remained cautious because of the low inflation even though yesterday’s unemployment claims showed a clear rise of unemployment the USD gained ground against the NZD. Today’s NFP will perhaps determine the short term inflation direction and I shall be looking for the Average earnings projected to rise from -0.1% to 0.2% and if there is a rise as forecasted, the USD will gain ground.
4 Hour Chart Analysis
Over the past two days, the price has been ranging and moving sideways as indicated by the 4 Hour bars shown in the chart. On the technical side, the price seems to be rejecting the 0.69 valuation and several two bar reversal patterns has been formed on the overbought regions of the stochastics. The OBV is also showing a negative slope with volume reduction over the past 2 days. This in my opinion will be a short term correction considering that this pair has been on a bullish run the whole of this week.
Let’s watch the NFP and the ISM Manufacturing PMI set to be released in the New York session as they may influence the general short term trend.
15 Min Chart Analysis
The Asian session was ranging in a slight bearish triangle bouncing off from the 38.2 retracement level and at the moment it is bouncing off at the 100 retracement level with the Stochastics indicating an oversold condition but the OBV signaling a continued volume reduction. With such mixed signals we shall wait for a perfect indicator combination at the overbought region perhaps at the beginning of the New York Session to initiate a sell probably at 0.694 and target 100 pips down to the 161.8 retracement level at 0.684 regions.
It’s advisable to be on standby till the NY session to initiate trades as we watch the NFP and the ISM Manufacturing PMI data.