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Forex Market Analysis | NZDUSD

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NZDUSD Short Term Trade

Currently, the NZDUSD pair rises 0.52% to 0.7085, with the recovery faltering at 0.7097. The Kiwi eases-off highs, although remains on the front as the investors cheer risk-on market profile amid rebounding global equities and oil prices from the Brexit-induced sell-off (Forex Market Analysis).

Forex Market Analysis - NZDUSD 1

NZDUSD Extension Zone And Gap

It seems tempting to enter a short NZDUSD position. The available trading range is too narrow relative to ATR-measured volatility however, arguing against taking the trade on risk/reward grounds. With that in mind, it seems most attractive to remain flat for now until an actionable setup can be identified (Forex Market Analysis).

Forex Market Analysis - NZDUSD 2

Potential Bearish BAT On NZDUSD

On the forex majors there is an uncertain feel today as sterling is fluctuating higher and lower and the yen stronger which should reflect reduced risk appetite, however there are mixed moves on the commodity currencies with Kiwi strength. Gold is higher by around $10 with silver also strong, whilst the oil price is following up yesterday’s gains with further upside today.

Forex Market Analysis - NZDUSD 3

NZDUSD Forex Market Analysis

The New Zealand Dollar appears to have established an interim top against its US namesake after prices put in a Bearish Engulfing candlestick pattern below the 0.73 figure. The sentiment-linked currency plunged amidrisk aversion triggered in the aftermath of the UK “Brexit” referendum. A daily close below the 50% Fibonacci retracement at 0.6986 opens the door for a challenge of the 61.8% level at 0.6913. Alternatively, a reversal back above the 38.2% Fib at 0.7060 clears the way for a test of the 23.6% retracement at 0.7150.

Forex Market Analysis - NZDUSD 4

However, the rebound on sterling of over 100 pips might sound a lot but in the context of around 1800 pips of weakness in two days, the move is a minor blip. The question is whether this is merely a consolidation before further selling pressure returns? The move is though managing to allow other markets to draw breath and regain some poise with equities having bounced and forex majors unwinding some losses against the safer haven US dollar.

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Andrew Pial

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