Yesterday, the NZD continued to strengthen with price action following through the FSR report. It is currently trending in the 0.6820 regions which by the way seems to be another minor double tops and represents the regions where price broke below the 2 month support trend line-visible in the 4 Hour chart. After yesterday’s news-especially the crude oil inventories which saw a drop to -3.8m from last week’s 2.8M there was a increase in demand for the NZD which further increased after the release of the Federal budget Balance-at 106.8B against 116.2Be and the price auction of the 10 year bond which remained largely unchanged. Earlier today, we saw that business-especially in the manufacturing sector were expanding and it printed 56.5 against last month’s 54.7 with inflation of food and food related services slowing down to 0.3% against 0.5% which was recorded last month. With this news, let’s see what happened on our charts:
Daily Chart Analysis
To begin with, we shall have a look at the behavior of the past two trading days. First, the evening star candle stick which formed on Tuesday and the continuation of the buy trend which followed through from yesterday midnight. Price action is now at a region of immense resistance and if price breaks through then as earlier indicated, we shall annul our shorts and go long. The 5 month resistance line and the 61.8 Fibonacci level drawn from last year’s HiLo represents areas of probable reversals. We are seeing that the stochastics and OBV are in the oversold region and unless there are breakthroughs in our resistance and a buy signal is formed by the stochastics then we shall go long.
There is no major news today except the weekly Unemployment claims set for 1230GMT with projections at 277K from last week’s 274K and then we shall have to wait and see how import prices changed in the US with estimates at 0.6% against last month’s 0.2%, mind you if there are changes in import prices then we shall expect some changes tomorrow from the Retail sales, an increase in the cost of importation will surely cause increase in retail prices.
4 HR Chart Analysis
There is a minor double top in development and if anything, prices might reverse from this region especially so if we analyze this time frame with what is happening in the 1 hour chart. In the Asian Session, there was a minor spark and NZD gained ground momentarily, as shown by the just closed candle stick in this 4 hour time
frame. Price however reduced in momentum to form the double tops with the yearly 61.8 Fibonacci level acting as our resistance.
15 Min Chart Analysis
If anything, price action in the Asian session was kind of ranging with a distinct reversal just below yesterday’s highs. Price is now trending in the 61.8 Fibonacci level and if we are to go short, we shall have to wait for the correct indicator combination in the overbought regions to initiate one. It is advisable to wait for signals in the London and NY session bearing in mind that some important economic data will be released then.
Otherwise, have a pipful day.