The NZD/USD has increased sharply today and has resumed the yesterday’s bullish candle, has erased the Friday’s massive drop, but remains to see what will happen in the coming days because the rate has slipped lower again in the last hours. The currency pair is challenging an important resistance area on the short term, we could have a great selling opportunity if the rate will stay somewhere below the 0.7325 level, the price has jumped above this level, but has failed to stabilize there. Personally, I’m waiting for a fresh new trading signal before I take any trading decision, remains to see if the Friday’s breakdown was valid or not.
The price has increased sharply in the start of this week, even if the New Zealand data have come in much worse than expected, the Trade Balance has dropped sharply from -351M to -1265M, has come in much below the -730M estimate, the trade deficit has reached the highest level after October 2014, but the Kiwi was remained steady versus the USD, has ignored the poor data because the USD was weakened by the USDX’s drop.
The USDX has decreased in the yesterday’s session even if the United States New Home Sales have decreased less than was expected, the indicator has fallen from 659K to 609K, less compared to the 598K estimate. Today we didn’t have economic figures from New Zealand, but the price could be influenced by the fundamental events as the US is to release the CB Consumer Confidence , which may drop from 101.1 to 98.6 points, on the other hand the Flas Services PMI could increase from 51.0 to 51.1 points. Moreover the Richmond Manufacturing Index could increase from -11 to -2 points, a poor data could force the greenback to decrease again despite the USDX’s current rally.

The price has come higher to retest the broken dynamic support levels, you can see that the rate has plunged on Friday through the lower median line (LML) of the major ascending pitchfork and through the Rising Wedge support level. The NZD/USD has found support at the upper median line (uml) of the descending pitchfork and now is pressuring the broken support levels, we have an important confluence area at the intersection of the LML with the Rising Wedge support level, a rejection here will bring us a very good selling opportunity on the short term. Personally, I would like to see a rejection here followed by a drop below the upper median line (uml) of the descending pitchfork, the Rising Wedge breakout will be confirmed when the rate will make new lows, right now is hovering below the 1.3000 psychological level.

I’ve added a short descending pitchfork on the H4 chart, the rate has found support at the median line (ml) of the minor descending pitchfork and was expected to climb toward the upper median line (uml), the bullish momentum could e stopped by the broken dynamic support levels or even by the minor sliding parallel line (short descending dotted line).

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Olimpiu Tuns

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