Guys, over the weekend the much anticipated Doha Convention took place and it ended with much disarray with Iran not participating to the disappointment of Saudi Arabia. This means there was no agreement anywhere to freeze the daily output of oil and prevent the oil glut and consequently it means the commodity currencies will experience hard times ahead. We can all agree any phenomena that affect the AUD has a secondary influence on the NZD and today the AUD opened with a 1% devaluation with the NZD opening close to 50 pips below Friday’s close though the good inflation news closed the gap in the Asian session today. With this news, now let’s see what happened on the charts:
Daily Chart Analysis
Technically speaking, there is some formation of bullish spinning tops at the 5 month resistance line and the one month support trend line is still significant enough to hold prices above it so is the 20 day moving average. Price has remained stagnant moving sideways in the past 4 trading days and we are looking forward for a major break above or below the last thirds of the ascending triangle. The direction where this break will orient will determine the trend direction for the next few trading months.
From Fundamentals, today’s CPI improved from -0.5% registered in the beginning of the year to 0.2% well above the forecasted 0.1% which was contributed mainly by the rising house prices and food to counter the decreasing oil prices and air fares. This meant that the gap developed due to Doha meeting was closed. This week there is no major economic news from either side even though there are important news which will likely influence this pair from Canada and Australia, so let’s keep watching those news too.
4HR Chart Analysis
We shall analysis this chart from two angles; yes, the 4 week support trend line holds and remains one of our important levels so we shall consider it in our analysis. Secondly, there is the formation of that double tops and if this minor resistance is broken, then price action will rally to the resistance trend line, if price don’t break above the double tops and reverses, it means that will be another M-Formation and we shall be on the right leg of this formation, we shall have to wait and watch for reversals in the 1 hour chart.
15 min Chart Analysis
During the Asian Session, price retraced 38.2% from Friday’s highs and this was because of the bad news from Qatar and it continued plummeting to Friday’s low before the good CPI data caused it to rally to Friday’s high again. Usually, when price action behave like this and rally’s from the 0.0 Fibonacci level, it will unlikely break above the 100.0 Fibonacci level and there is high chances of a ranging market. As we can observe at the moment, there is a formation of a sell signal at the 100 Fibonacci retracement level and on Friday’s high. We shall be waiting for the London session to see what will happen.
Verdict: Sell at all highs.