Yesterday price action closed convincingly over the resistance line and was because of the good news coming from all quarters of the world. NZD being influenced greatly by commodity exporting economies especially Australia which is impacted by any good news related to any major commodity. Well, yesterday there was a rumor that the Saudis have reached a pact with the Russians to reduce the oil output at least in the mean time to boost oil dependent nations which have taken a big hit, on this news oil prices surged 40 cents and caused the NZD to rally by 30 pips after the news. In the Asian session, the Chinese reported a 11.5% rise of exports, imports reducing by 7.6%-which by the way continued the declining imports now in its 17th month-and a reduction of Surplus by $30 billion. With these crucial fundamentals, let’s see what happened on our charts:
Daily Chart Analysis
There was a 75 pip surge yesterday from the 0.685 regions and a clear break of the resistance line. This rally is set to continue with some minor retracement especially if today’s retail news turns favorable for the USD. Both volumes and momentum indicators are moving in sync and no contradicting signals.
Fundamentally speaking, the US data is set to spoil the party and why not? Economists are confident that retail sales will turn out positive for the greenback with core retail sales rising from -0.1% to 0.4%, monthly retail sales rising from -0.1% to 0.1% and you should be keen on the Producers Price Index which is set to rise from -0.2% to 0.3%. if this turn out to be as forecasted, we shall see a correction and a selling frenzy.
1 Hr Chart Analysis
The current upward trend is facing one obstacle at the moment, price action is hovering at the peak of the double top as marked by the green rectangle above. There is a reduction of momentum too, stochastics are well in the overbought regions bouncing off from the upper BB and the OBV is showing a reducing bull volume. If price close above the peak, we shall add to our bulls today and if it doesn’t we shall be selling following the trend and continue with the right peak of the M-formation.
15 Min Chart Analysis
In the Asian session, price action was buoyed by good Chinese news and rose, well above yesterday’s highs of 0.6945. Price could reach the 161.8 Fibonacci extension level and retraced with the sell signal formation as shown by both OBV and Stochastics reducing in volume and momentum respectively.
There are two things that might happen, price might correct to the 100.0 or 61.8 level and bounce back bull trend continuation or price might actually bounce back from the 100 level to the 161.8 Fibonacci extensions before the sell resumes. But at the moment, since this lower time frame trend is influenced by higher time frames, we shall be looking for the right indicator combination to initiate a sell or a buy.