Yesterday investors were eager to hear from Yellen and GDP readings. What trickled in was a somehow mixed result with GDP expanding in the second quarter by 1.4% and beating expectations at 1.3% but at the same time the Gross d0mestic income was revised down and actually reduced by 0.2%. This tepid domestic income reduction will have a contagious effect to household-who by the way are doing the heavy lifting of driving economic growth-Household consumption account for more than 70% of US economic growth. We earlier saw that wages have been stagnant with labor conditions lack luster and just within the projections needed despite businesses increasing their investment, employing more and financial releases above estimated revenues. It’s no wonder that household consumption was revised down to 4.3% from 4.4%. in other news we Fed official Lockhart stated that November meeting will be live and for investors what remains now is speculation on when they will raise rate rather than by how much.
To the charts now and the NZD gained tremendously through the NY and Asian sessions with the Yen on the receiving end. Since this is end month, we can only guess this to be a profit taking induced move. Yen suffered because of weak inflation reports coupled by consumers not wanting to spend even when there are a lot of incentives taken by BoJ.
For today, the strategy for this currency pair is to sell at all highs and right now, the best thing to do is to sell at every overbought stochastics in the 15 minute chart and if there is any retracement towards or above the 0.728 resistance line, then you sell whenever there is a overbought stochastics. Since there is no major economic news from either economy, this should be the plan:
Sell Limit: 0.729-0.731-this falls to yesterday’s Highs and the 38.2% Fibonacci retracement levels.
SL: 0.734-0.735, which is a 40 pip range within the sell zone.
TP: trail your profits.
Otherwise, strive to conserve and increase your capital and have a good weekend