From the much anticipated US data released yesterday, we can only say one thing; it elicited mixed reactions from traders. For once, core CPI reduced from 0.3% to 0.1% with CPI increasing from -0.2% to 0.1%. Both data was somehow disappointing and despite economist forecasting better figures, it seems the economy inflation isn’t growing as anticipated even though these two data caused a minor rally. On the other hand, employment is on the rise with the weekly unemployment claims reducing to 253K from last week’s 266K which is perfectly in sync with what Yellen wants-an ideal unemployment rate stable at around 5% to warrant any Fed’s tightening.
With these data, let’s see what happened on the chart:
Daily Chart Analysis
The technicals indicate a NZD gain today this so considering these: it can be clearly observed that the 20 day moving average is a good support and price always rally once price action is near it. OBV on the other hand is showing an increase in volumes with the support trend line in place over the last month, this behavior of the OBV will also influence how the stochastics will act since volume has an influence on momentum. We forecast a situation where price will close above yesterday’s opening because of yesterday’s unconvincing data.
Many analysts are saying that the US two year bullish run is over and a big correction is on the tunnels with the NZD set to continue with the overvaluation. At the moment the NZD is 3.5% overvalued and this will increase as price will rally even higher to the 0.73 regions in the coming few weeks. We shall observe today’s Consumer sentiment news to gauge how people anticipate future economic conditions in the US which is forecasted at 91.9 from 91.0.
4HR Chart Analysis
From the chart, both volume and momentum are rising, the 3 weeks support trend line is also proving significant and remaining unbroken. This new candlestick which formed on the Asian session meant that the 5 month resistance was broken and since it formed on the last quarter of the rising triangle and bouncing off from the lower BB, it will be hardly a false breakout. We shall anticipate price to rise further and touch the 5 week resistance trend line which formed from early March.
15 Min Chart Analysis
Yesterday was a ranging day with price rising after hitting the 161.8 Fibonacci level and extension which were formed from Wednesday HiLo. During the New York session, the USD weakened and there was a formation of a strong buy signal with both the OBV and momentum turning from the oversold region at the 31.8 Fibonacci level and continuing the rally throughout the Asian session. We shall expect price to hit the 161.8 extension today before a slight correction maybe to the 100.0 level before the upward trend continues.
Verdict: Buy at all lows.