Starting off this week’s daily watchlist with a textbook pullback setup on NZD/JPY. Are the sellers about to hop in and take the pair back?
|Equity Markets||Bond Yields||Commodities & Crypto|
|DAX: 11326.95 -0.33%
FTSE: 7157.35 -0.70%
S&P500: 2790.38 -0.37%
DJIA: 25415.16 -0.34%
|US 10-yr 2.43% -0.025
Bund 10-YR -0.016% +0.009
UK 10-YR: 1.013% +0.001
JPN 10-YR: -0.092% -0.014
|Oil: 60.12 -0.18%
Gold: 1313.80 +0.93%
Bitcoin: 3959.73 -0.29%
Etherium: 134.57 -0.69%
Fresh Market Headlines & Economic data:
- Flattened yield curve reason to be nervous, but US economy solid – Fed’s Evans
- Fed’s Harker still sees one rate hike ‘at most’ this year
- China to reduce government intervention in industrial sector
- Brexit: PM to make statement in Commons
- Time’s up, Theresa’? May battles to keep control of Brexit
- German Ifo business climate rises sharply in March on strong domestic demand
- Japan all industries activity down -0.2% vs. downward revision of previous read to -0.6%
Upcoming Potential Catalysts on the Forex Calendar:
- RBA’s Ellis speaks in Sydney at 8:30 pm GMT
- New Zealand trade balance at 9:45 pm GMT
- Bank of Japan Summary of opinions at 11:50 pm GMT
- Japan services producer prices at 11:50 pm GMT
What to Watch: NZD/JPY
The economic calendar looks pretty empty for the rest of the Monday’s session, but we do have some low tier events from New Zealand (trade balance update) and Japan (Bank of Japan Summary of opinions) that could move the needle a little bit for this textbook technical setup on NZD/JPY.
On the one hour chart above, we can see the pair has bounce higher after a strong momentum move from around 76.50 down to 75.50 since Friday. This move actually broke pretty strong support around the 76.00 handle that held for over a week, so traders could be looking to play a break-and-retest scenario ahead. Also, this area also lines up with the 50% Fibonacci retracement of that move lower and stochastic is signaling potentially short-term overbought conditions.
So, this setup is lining up pretty well for the bears and if reversal patterns emerge the downside move has decent potential of success, especially given the risk aversion mood of the markets to start the week. For the bulls, it’s tough to see any bullish catalysts at the moment, but if we do get one, a break and retest of the 76.00 handle may warrant a look with the right catalyst. This could possibly come from a surprise U.S.-China trade deal announcement, a Brexit deal passing U.K. Parliament, or something of that nature. These are really low probability situations right now, but they’re something to always have a plan for because the reactions could be big.