Looks like the Kiwi had its wings clipped recently! Do you think it’ll be able to resume its flight soon?
NZD/USD has retreated from the .8800 levels after New Zealand printed a weak quarterly CPI and reported a worse than expected dairy auction earlier this week. Risk appetite has also weakened, forcing the Kiwi to return most of its recent gains.
However, the longer-term uptrend still seems to be intact, as the positive interest rate differential is keeping the pair supported. Traders might soon start positioning ahead of another potential RBNZ rate hike in their monetary policy statement this month, possibly leading to a return of Kiwi rallies.
Using the Fib tool the swing low and high on the 4-hour time frame shows that the 38.2% level is close to the area of interest near the .8700 handle. To top it off, a bullish divergence has formed, with stochastic making lower lows and price making higher lows. This could be a sign that price could bounce sooner or later, but I’d rather wait for stochastic to start moving higher and for a reversal candlestick to form on the Fibs before going long.
That’s all I got for now! Do you think it’s a good trade idea? I’ll keep you posted when I set my actual entry orders so stay tuned!
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