With the commodity prices showing a little bit of recovery and the FEDs intentions of keeping the dollar reasonably priced been floated around, we expect this pair to rise in the coming few weeks. This is evident from the price action since the beginning of the year which is evident that the NZD is gaining ground against the USD and is heavily supported both from the technical and fundamental perspectives.
Let’s have a look at the weekly chart see what might happen from a technical and fundamental angle:
For the past 8 weeks or so, price action has been bouncing along the 20 week simple moving average and it shows a bullish tendency. This is so because looking at the two trend lines, it’s a rising triangle almost at its third phase where from analysis, price action tends to break through. It remains choppy though for now as we have mixed signals from the Stochastics which shows a decreasing momentum and the OBV isn’t indicative of the investor’s volume and direction of trend. If it breaks above the 0.69 price levels convincingly and breaks above the resistance trend line then we have a buy signal, the reverse is true if it also breaks below the support trend line.
This week’s fundamentals will be based purely on the data from the US since the only worthy news which is of little impact is the Building consents which is set to be released tomorrow 945PM GMT+3. From the US, there are several data set to be released which will highly impact and determine the long term direction of this pair. Beginning tomorrow where crude oil inventories will be released then on Friday for the Non-Farm Employment change, unemployment rates and Average hourly earnings.
For daily traders, this chart is skewed on the bullish and this is a conclusion drawn from the behavior of the following indicators: first, there seems to a strong support which price action can’t break lower caused by the 20 day BB lower band and the 200 day moving average and supported by the OBV which is showing a positive gradient. This was confirmed by the two bar reversal which formed on Monday forming a shooting star, if price close above the 20 day moving average, then we are in for a bullish run.
There is no economic data to be released today about the kiwi but there is lots of activity for the USD. The CB consumer confidence will be released today at 2:00PM GMT+3 with a positive outlook of 93.9 from 92.2 and then later Yellen speaks at the launch of New York Economic club.
5 minutes chart
The Asian session was purely bullish and closed above yesterday’s high. We have mixed signals from OBV and stochastics but we expect a retracement to the 100 or 61.8 retracement levels before the price pick up again. Since the daily technicals point for a bullish trend, we shall wait until all the indicators are in the oversold level to initiate a buy.
At 2:00PM GMT+3 and later when Yellen speaks at 4:20PM can determine the direction of the Kiwi. At the moment, it will be advisable to go with the general trend and buy at all lows but only when all the indicators point so, that is, when they are at the oversold region and pointing up.
Verdict: Buy at all lows.