NZDUSD DAILY ANALYSIS FOR 06.05.2016

Hello Traders,

For the month of June, the general number of job cuts in the US dropped to 5.8% against March’s 31.7% data which was released yesterday when the Challenger Job Cuts was announced, even though this data comes too earlier to ascertain what is really happening in the labour markets, it can drop some hints on what is expected on the general employment state in the country. Weekly unemployment claims also trickled in and it seems more and more people are filling for benefits as this number rose to 274K compared to last week’s 257K. Most of the important fundamentals for this pair have been released and we are only waiting for NFP which will be released later today and now since we have the data for previous economic data, let’s see what happened on the charts:

Daily Chart Analysis

NZDUSD Daily Chart-06.05.2016

From Wednesday, this pair has been ranging on a narrow 50-70 pips channel and yesterday it was no different as the daily resistance line kept being tested and eventually it was broken early today during the Asian Session. The 0.687 area is an important level as it serves as a strong resistance/support zone. At the moment, price action is at the daily support trend line and we are waiting to see the reaction in the European and London session. If price action fails to breach this level then our longs remain valid and we shall look to initiate buy positions only if the lower time frames signals point to a long. As observed, price action is supported with falling momentum and volumes shown by the OBV and at the same time, the area is in strong support zone.

Fundamentally speaking, the NFP will likely change the overall outlook of this pair at least in the short term. A look at the monthly chart, it indicates a beginning of a bullish run and since this is the end of the first week, we shall be looking to buy as the trend goes back and align with what the monthlies are signaling. If NFP comes in lower than the forecasted 203K, down from 215K, and average hourly earnings show no improvements then we shall be confident with a buy and hold this trade till the end of the month, the opposite will be true.

4HR Chart Analysis

NZDUSD 4HR Chart-06.05.2016

This week has been a pure bearish run, but this is a common trait in the first weeks of a bullish month, as the monthly chart tries to establish the lower wick. A look at this chart shows that price action is right at the support of the 4HR trend line and it looks like it will be broken after that bullish candlestick from the Asian session. We shall observe the behavior of this pair and if the trend line holds and a bullish candle stick forms then we go long.

15Min Chart Analysis

NZDUSD 15Min Chart-06.05.2016

RBA monetary policy statement came and some volatility was felt with the pair plummeting to 0.685 level and clearly closing below the psychological 0.687 level. This meant that price hit the 161.8 Fibonacci level and is now ranging below it but as seen, the pair is swinging at the oversold region of the stochastics and OBV seems to indicate that volumes will be added sooner or later. I will recommend a buy at all lows as pointed by the above indicators as we await the much anticipated NFP set for 1230 GMT.

All the best and have a good weekend.

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