It looks like the kiwi is strengthening as each day passes and thrashing all the predictions made so far. Yes, the NFP came in full blast with the economy creating 287K jobs against the expected 175K jobs this is up from the adjusted 11K jobs created in May-the worst since 2010. We saw unemployment increasing to 4.9% in June and average hourly earnings increasing by 0.1% representing a 2.6% YoY increase. Though this strong job data cause some volatility, price reversed very fast and those whipsaws saw the NZD closing on the upside. Chances of a rate hike was brought on the table after this but we expect the Feds to keep their plans on hold and fix their eyes on BoE this Thursday as easing is expected and that is accompanied by rate cuts to 0.25% according to economists.
Technically, it seems like we shall be trending higher and higher if we base our analysis on the weekly and monthly charts. First, in the monthly charts, if we draw a Fibonacci from the Hi-lo of the last major rally from lows of 0.4 to 0.8 reached in 2014 before that major reversal, we can say that the 50 Fibonacci level fell exactly where the reversal started in September last year and well, it was at a point of confluence because at the same time it was when the Stochastics was turning from the oversold regions and right now, the signal remains a strong buy.
Since the monthly chart is king and we shall respect the current trend our game plan will be as follows:
There was that strong bullish candle in the weekly chart that broke through the 38.2 Fibonacci level and through March 2015 support turned resistance and we shall be waiting for a small reversal before the trend continues this week the reason being there was no upper wick in the weekly chart close-meaning there was no selling pressure whatsoever. Our next target this week will be the 23.6 Fibonacci level in the weekly chart and we expect this bullish trend to continue through this month. We conclude this because of those long lower wicks candlesticks and upper BB banding in the 4 hour chart.
We can also see the 161.8 Fibonacci level was struck-drawn from last week’s Hi-Lo- and check out the level where price action reversed last week, exactly at the 50% retracement level which was in sync with the Stochastics turning out from the oversold region of the Stochastics. Just like last week, we shall draw a Fibonacci retracement level from last week’s Hi-Lo and depending be keen on the stochastics-we shall be waiting for the buying signal in the 4 hour chart.