I’m seeing this neat long-term technical play on NZD/USD’s daily chart, but I gotta check if fundamentals line up with a potential bounce. Here’s what I got.
Long NZD/USD Idea
On its daily time frame, this pair has been pacing back and forth between support at the .6900 major psychological level and resistance around .7400. Price is closing in on the bottom of its range and might be due for a bounce back to the top.
Stochastic has been indicating oversold conditions for quite some time, which suggests that Kiwi bears are feeling exhausted and might be willing to let bulls take over from here. The dollar has also been on a tear for the past few weeks, so it’s understandable if profit-taking happens soon.
However, geopolitical risks are still strongly in play these days as traders are waiting to see whether the U.S. will withdraw from the Iran deal or not. But even if this could mean repercussions on U.S. foreign relations, it looks like the safe-haven dollar could still benefit from risk-off vibes, especially since FOMC members have been mostly optimistic.
New Zealand has the RBNZ decision coming up, and I think this could determine if a bounce off support is possible. The central bank hasn’t exactly been one of the more hawkish ones in the past, but any shift to a more positive tone could wind up boosting the Kiwi.
I haven’t set any entry orders yet since I want to wait for these major events to pan out before putting some risk on the line. If I do enter, I’ll set my stop below those spikes lower around .6850 and initially aim for the middle of the range as my target.
What do you guys think?
See also: Q4 2017 Trading Performance Review
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