The Kiwi might be looking to resume its flight versus the U.S. dollar soon as it approaches a major area of interest. Here’s the long entry area I’m watching.
Long NZD/USD Idea
A couple of months back, NZD/USD broke past the top of its descending channel visible on the daily time frame. This meant that the pair was in for a reversal from its long-term drop.
However, Kiwi bulls ran out of steam upon testing the .7550 minor psychological resistance and pulled back. Applying the Fibonacci tool on the swing low and high shows that the broken channel resistance lines up with the 50% Fib around .7150-.7200.
In addition, a bullish divergence can be seen as stochastic made lower lows since May while price had higher lows then. Once stochastic pulls up from the oversold region, buyers could prop the pair back up to its recent highs and beyond.Risk aversion and the market reaction to the RBNZ’s jawboning are currently weighing on the Kiwi, though, so I’m not too keen about hopping in at market just yet. I plan on waiting for reversal candlesticks to form around the 50% to 61.8% Fibs and for stochastic to head higher before going long.
As for the Greenback, weaker than expected CPI printed last Friday and potentially downbeat retail sales data could spur some losses. The FOMC minutes are also up for release soon and cautious remarks from policymakers could dampen hopes for a September hike.
I’m looking to go long around .7150-.7200, with a stop below the .7000 major psychological support and a target at the swing high of .7550. What do you guys think?
See also: Q2 2017 Trading Performance Review
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