Yesterday we saw another daily gain for the NZD
breaking through the 0.68 price and trending strongly above this zone moving from
0.676 to yesterday’s highs of 0.682 levels that represented a 65 pip
range-which is within the average daily range for this pair. This was buoyed
especially with the good auction price at $232-9 of their dairy products which
improved to 3.4% from last week’s 2.6%. Although this was the second
consecutive rise of dairy prices, farmers are yet to break even and are still
far from historical average prices which were above $3300/MT. From the US, ISM
Manufacturing PMI came in at 51.3 against 50.5e with general manufacturing
prices improving to 63.5 from May’s 59.0; this meant there was expansion in the
economy and subtle hints of inflations considering the data.
Now to the charts:
Technically, price broke and closed above the 20
day moving average, a very important resistance for the past 3 month with price
targeting the 0.685 level which is also another region where reversals is
expected. It is important to note that this level is a confluence zone between
the 5-month resistance and the 61.8 Fibonacci level when it is drawn from last
year’s Hi-Lo. Both volume and momentum are on the increase with candlesticks
bouncing off the lower BB strongly and conforming to the buy signal created by
the swinging stochastics. If this resistance zone is broken, then our target
will be this year’s high at 0.7 and another level of confluence with the 50
Today’s fundamentals can either break or make this
pair with our concerns being on tomorrow’s NFP. ADP Non Farm Employment change
is forecasting a 174K from last month’s 156K while the weekly unemployment
claims is also forecasting a rise of unemployment claims to 270K from 268K
recorded last week-seasonally adjusted. These are news which in my opinion will
change the general bearing of this pair. Watch this out at 1230 GMT.
4HR Chart Analysis
Price action broke through the main resistance
trend line yesterday-at 0.678 and with a minor ceiling being the 200-moving
average which is also another region of possible reversals. From daily chart
and this time frame, we can confidently say that if price breach the 0.685
level then we are in for an upward rally this month. Stochastics is in the
overbought region and a spinning top of those 4 candlesticks formed from the NY
session means the market is moving sideways and accumulation is happening with
a break above or reversal from the level price is trending at.
Minute Chart Analysis
In the Asian session, price momentarily broke
above yesterday’s high and continued to move sideways along the 100 Fibonacci
level. If anything, price might correct to 61.8 or 50.0 Fibonacci levels-drawn
from yesterday’s Hi-Lo. If it does, our take profit will be at 0.6856. Only initiate
buy trade when there is a proper indicator combination in the oversold region during
European and NY sessions. The outcome of today’s fundamentals will surely
influence the trend direction but overly, we remain bullish.
Have a pipful day.
About The Post
About The Forex Analyst
I have been trading Forex and commodities for the past 3 years. [email protected] for further discussions.