In the earlier session, there was some good news from China with them increasing their reference rate from 6.4700 from yesterday’s 6.4579 and consequently injecting 250B Yuan into the economy citing an improvement of external economic environment and a domestic economic stimulus brought about by infrastructure and property development. There is also some relevant news from Kuwait that there are resuming their normal operations after they ended their 3-day strike and therefore we shall wait to see if this resumption will have an effect on commodity currencies and in extension the NZD. Will the fuel glut continue and price plummet? Or their operations will remain irrelevant.
Now with this kind of news let’s see what happened in the charts:
Daily Chart Analysis
Technically speaking, the bullish trend is expected to continue at least in the short run, the support turned resistance line which developed over from mid June was broken with price action aiming the resistance line which is clear in the 4 hour chart-developed on a one month rising channel. All technicals are pointing to a continued bull run with the OBV showing an increasing volume and the candle stick beginning to hug the BB upper band. Also, the 20 day moving average has a positive slope and price action is trending well above it.
From fundamentals, there was an improvement of the biweekly dairy product prices from 2.1% to 3.8% while the Building permits from the US decreased from 1.18M to 1.09M and with these two releases it meant the NZD gained traction creating a new 2016 high of around 0.7055. Today’s news will be on Existing US Home sales projected to be on 5.29M from 5.08M which was released last month and it will be released at 1400Hrs GMT and then we have the weekly Crude Oil inventories to be released at 1500Hrs GMT with indication of an increasing fuel demand and a reducing inventories projected at 2.2M barrels from last week’s 6.6M barrels. We shall have to watch and pay attention to this news as they will directly affect the USD and other currency commodities as highlighted earlier.
4HR Chart Analysis
There is a slight price correction developing at the moment with price bouncing off from the upper BB and indication of reducing NZD demand as OBV is showing a decline in volumes and therefore momentum from the overbought region of the stochastics. If price was to decline then we shall wait to buy at the double tops and a minor resistance which was confirmed mid last week. Price action will however be influenced with the outcome of today’s economic news set to be released from these two powerhouses.
15 Min Chart Analysis
The Asian session was purely bearish and it feed off from a decrease in momentum and volume at the end of New York Session. So far price has retraced to the 38.2 Fibonacci level with a formation of a strong reversal signal in the oversold region of the 15 minutes chart. If price is to bounce back-with supportive fundamentals- then we shall expect price to reach the 168.2 Fibonacci extension level.
It is prudent to wait for the perfect signal to initiate only buys at the moment especially if in the London session and during overlap of New York and London Session when price action is volatile.