The Fundamentals
The Kiwi maintains the offered tone in the Asian trades, extending its range-trade into a fifth day, as markets await fresh impetus from the Chinese manufacturing PMI reports for further momentum. Is NZDUSD ready to change direction?
In the day ahead, risk remains to the downside, as the demand for the higher-yielding risk currencies such as the US rates, NZD, equities and oil prices took a hit on the latest round of North Korea, which spooked markets once again.
North Korea launch several missiles test, which were fired into Japan’s airspace, and highly condemned by South Korea, Japan and US.
However, the Kiwi found fresh buyers near 0.7200 levels, as ongoing weakness in the US dollar against its major peers, in the wake of Yellen’s disappointing speech could help keep the downside cushioned.
Calendar-wise, there is nothing of note for the major until the US session, which sees the release of the US consumer confidence data.
The Technicals
I am looking at the NZDUSD chart. There are a few factors that are making me think it might be time for this pair to turn the tide.
The Bigger Picture
The Daily chart looks quite bullish to me. There is the major support level at 0.7200. A Bullish Engulfing pattern formed two sessions ago. Today’s candle might end up being a bearish rejection or a pin bar.
It seems like bears are not in control anymore (or at least for the foreseeable future). Let’s zoom in and change to 4 Hour chart.
4 Hour Chart
It seems like a Bullish Engulfing pattern is about to form on the 4H chart. This gives a further indication that bulls are ready to explore new heights. From an intraday perspective, the picture looks bullish.
A possible scenario could be a long trade after a small retracement towards the middle of the bullish bar. I will be monitoring for future developments and possibly take advantage of this setup.
Let’s see if price action confirms my expectations.
Happy Trading,
Disclaimer: This article is for informational purposes only and not for the purpose of providing investment advice.
