Hello Traders,

It’s clear now guys, the bears have taken control after that convincing break below the two obvious supports now turned resistance line. On the daily chart, price has retraced 100% and is at last month’s lows with price action trending at the 100 Fibonacci Level with the next stop projected at the 0.66 regions.

Let’s have a look on what the charts for a more detailed analysis for our forecast:

Daily chart Analysis

NZDUSD Daily chart-10.05.2016

Back on 03.05.2016, after the formation of that strong two bar reversal bar, price action has been on a strong bear run. It must be noted that the bar formed and swung from the overbought region of the stochastics down and it was strong enough as this bar engulfed two previous bullish daily candles. This was after the RBA cut interest rates and it formed the second leg of the M-formation. After that price action has been on a huge momentum breaking below two strong support zones in the 0.6870 regions which was formed by the 5 month resistance level before the break and then the two support lines-formed by the 20 day moving average and the support trend line. So, from a technical point of view, the monthly bullish run has been invalidated in my opinion. A look into the monthly chart will show that price is reversing at the 20 month moving average, the middle band of the BB which has a distinctive negative slope and then the weekly chart is reversing from the overbought region of the stochastics and the current momentum is a follow through from last week’s two bar reversal pattern.

Back to the daily chart, the above conclusion of a bearish run is confirmed by that band hugging that is taking place on the lower BB. This means one thing, the bearish momentum is very strong to be ignored and after RBNZ rate cut, we will expect further easing as we wait for the commodity market to rebound. Well, this prospect of further easing will be hinted when today’s RBNZ Financial Stability Report will be released at 2100GMT and then later when Governor Wheller speaks about the Financial Stability Report. On Friday, we shall have the Quarterly Retail Sales released and is forecasted at 1.0 from Dec’s 1.5 then of course, the weekly crude oil inventories set for Wednesday, a release which will be key considering all the wildfires in Canada which is affecting its daily output.

4HR Chart Analysis

NZDUSD 4HR chart-10.05.2016

From the charts, the HiLo Fibonacci extension of this pair drawn from last week shows that we are yet to strike the 161.8 Fibonacci level and therefore, we shall still maintain our shorts. This is further supported by candlestick hugging at the lower BB showing strong momentum. So if you are trading this pair, we should be moving with the trends on the higher time frames and look to enter on any price correction on the lower time frame charts.

15 Min Chart Analysis

NZDUSD 15Min chart-10.05.2016

The Asian session was purely bearish and this is expected to continue in other session after a minor price correction maybe in the European or London session as both the stochastics and OBV are in the oversold regions. A Fibo HiLo Extension from yesterday’s candlestick shows that price could correct to the 100.0 Level before rebounding and that is only when you should initiate a short when both indicators are in the overbought regions. Other than the indicator combination, watch out for today’s releases with the Jolts Job Openings forecasted at 5.55M from last month’s 5.45M indicating an expansion in the Non-Farming sector.

Have a pipful day




  1. Wayne McDonell - TradersWay.com says:

    Excellent post. Thank you.

  2. Dalmas Ngetich - FOREX.TODAY says:

    Thanks Wayne, By the way what do you think of this observation..from last year’s hiLo, price action is strongly reversing with that double bar reversal at the 50% Fibonacci retracement level in the monthly charts..I’m inclined to think that if we hold on to our shorts, price might actually rally even up to the 161.8 Fibonacci extension in the long run, at 0.55..what do you think?

Leave a Reply