The downbeat RBNZ outlook could keep weighing on the New Zealand dollar, dragging it down to the next long-term floor. Here’s my plan.
Short NZD/CHF Idea
I’m seeing a steady downtrend on the pair’s short-term chart as a descending trend line can be drawn to connect its recent highs. Price seems due for a correction, so I’m keeping a lookout for these Fib levels.
In particular, the 50% to 61.8% retracement levels span an area of interest or former support zone that might hold as resistance. Stochastic is already dipping into overbought territory, which suggests that this could be a shallow pullback.
In their latest policy announcement, the RBNZ downgraded growth and inflation forecasts while pushing back OCR hike expectations. Although the Kiwi is drawing some support from risk-taking yesterday, bears are likely to jump back in when the focus shifts back to fundamentals.Besides, RBNZ head Orr mentioned that a move lower for the New Zealand dollar would be a good thing. To top it off, prolonged uncertainty in trade deals could wind up dragging the commodity currency further.
As for the Swiss franc, I’m thinking it could shrug off political jitters in the European region at some point and resume trading on safe-haven flows. After all, its other buddies are hampered by Italian political troubles or Brexit concerns while the dollar still seems sensitive to geopolitical risk.
If I’m able to short at that pullback area, I’ll set a stop past the .7000 major psychological level and trend line. As for my target, I’m aiming for the bottom of the descending triangle visible on the daily chart above.
Also, I’ll be looking out for the annual budget release by New Zealand today as this could contain economic insights from their government leaders as well. Stay tuned!
See also: Q4 2017 Trading Performance Review
This content is strictly for informational purposes only and does not constitute as investment advice. Trading any financial market involves risk. Please read our Risk Disclosure to make sure you understand the risks involved.