I’m seeing a reversal formation on the short-term chart of NZD/USD, and I’m thinking that this week’s top-tier events might confirm a big move.
Long NZD/USD Idea
This pair has created a double bottom after a couple of failed attempts to break below the .6500 handle. Price has yet to test the neckline around .6675, and a break higher could set off a climb that’s the same height as the formation.
However, I’m a bit worried that stochastic is already hanging out at the overbought zone to signal that buyers are exhausted.
Then again, this week’s event risks for the Kiwi might be enough to trigger another run higher. In particular, the RBNZ statement is expected to be less downbeat than before since the central bank already cut rates previously. Any indication that they’re not eager to ease again could extend this NZD relief rally.
Besides, positive expectations for the Trump-Xi meeting during the G20 Summit could also keep higher-yielding currencies supported. Calling another truce and shaking on a possible trade deal could boost risk appetite even more.
As for the U.S. dollar, the Fed’s more dovish than expected statement last week was enough to drag it lower and at the same time dampen safe-haven demand.
I’m looking to go long at .6715, with a stop at .6585 and a target at longer-term resistance close to .6900. That should give me roughly 1.3-to-1 R:R, which would be pretty good for a short-term play.
What do you guys think?
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