Yesterday was a ranging day, and to put it to perspective we shall look at the behavior of price action which moved by a modest 50 pips-a lower figure from the daily average of 70 pips. From fundamental analysis, we can say that the US data didn’t do much to cause volatility especially if you look at the much anticipated CPI data which printed out a 0.4% change of prices for the month of April against 0.3%e with core CPI remaining unchanged at 0.2%. Building Approvals and House Starts remained unchanged. Though there were no major changes, we saw an improvement in the industrial Capacity Manufacturing Rate recording increasing to 75.4% from 75.1% showing hints of further inflations in the coming months keeping in mind that the just released CPI data was the biggest gain in 3 years. The NZD on the other hand showed improvement after the GDT Price index which saw a 2.6% improvement of prices brought about majorly by currency support, prices above 0.7 will however be disastrous for farmers and will trigger further rate cuts by RBNZ.
Now with these fundamentals, let’s see what happened on our charts:
Daily Chart Analysis
For the second time, price action didn’t breach through the support at around 0.687 regions with price action rebounding strongly from that zone and the result, long upper wicks on the daily candle sticks of 12th and 17th May. We expect prices to trend lower with resistance created by the horizontal and the daily trend lines. Also, watch the slope of the 20 day moving average which is our dynamic resistance line.
Today’s major news will be about the FOMC meeting at 1800GMT with details on what prevail on April Fund Rate decision. Usually, these minutes spark some volatility as a glimpse on the reason why rates were held steady is analyzed.
4 Hour Chart Analysis
Technically speaking, the 4 hour candle sticks are showing a trend of lower lows and higher lows with the epitome being mid yesterday when price action failed to breach last week’s double tops at around 0.685 area. There is a clear bias on price action as volume and momentum seems to swing into the sell motion, in my opinion, price correction to the 0.681 area will be ideal to short if you are trading this time frame.
15 Minute Chart Analysis
It is worth nothing that price has corrected 100% and is trending around yesterday’s open summing up what was a purely ranging day in a bearish momentum. If anything, the Asian session was also bearish in all aspects after NZD PPI fell to -1.2% for first quarter from 0.3%e. if price corrects to the 50-61.8% Fibonacci level then we shall be confident to short from those level so long as there are perfect indicator combination. We wait for the London or NY session when weekly Crude Oil inventories will be released at 1500 GMT with forecast at -3.1% from last week’s 3.4% before the FOMC meeting minutes.
Have a pipful day.