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I’m looking at this simple trend setup on NZD/USD, and it looks like there’s good enough reason to go with the flow.

But before we get to the chart setup, here’s a quick recap of price action and the catalysts in the past trading sessions:

Major Forex Pairs Price Performance from MarketMilk
Major Forex Pairs Price Performance from MarketMilk

Upcoming Potential Catalysts on the Economic Calendar:

  • Swiss trade balance at 7:00 am GMT
  • ECB monetary policy meeting minutes at 12:30 pm GMT
  • BOE member Saunders to testify

What to Watch: NZD/USD

 NZD/USD 1-hour Forex Chart
NZD/USD 1-hour Forex Chart

The Kiwi gave up some ground to the Greenback in the previous sessions, but it looks like buyers are defending the ascending channel bottom on NZD/USD.

There seem to be no noteworthy economic releases in the upcoming trading session, so I’m guessing the current trend and market sentiment could carry on.

After all, the latest batch of economic reports from the U.S. and Australia have shown strong improvements in consumer spending and employment, respectively. This might be enough to assure traders that major economies are starting to recover from the impact of the pandemic, thus lifting risk appetite.

I’m just a bit worried that the moving averages made a bearish crossover while Stochastic is starting to head lower, so another dip to the support levels might follow.

If you’re counting on risk-off flows to return, you could wait for a break below the channel bottom and go for a reversal of the uptrend!