With the RBNZ set to release their latest monetary policy statement soon, Kiwi charts are top priority for this week’s watchlist.
With the Reserve Bank of New Zealand expected to acknowledge the downside risks of global growth while keeping their optimism, it makes sense to have a plan for both a bullish and bearish move in the Kiwi.
For traders who want to get setup for both ways, this consolidating pattern on NZD/JPY is one to watch as the market tightens up into a rising triangle pattern around the 76.50 handle. A break above that level would likely draw in more buyers who are playing the trend higher (and interest carry advantage), while a short break of the rising ‘highs’ could spark a big move from fresh sellers and traders looking to exit long positions.
EUR/NZD could be a big mover this week, not only from the RBNZ event but also on a potential reaction to ECB President Mario Draghi giving a speech this Wednesday in Frankfurt, Germany.
On the four hour chart above, EUR/NZD has been consolidating into a descending triangle pattern with major support around 0.7060. If volatility picks up and you’re a bear on the pair, look for a confirmation momentum move lower because with the stocahstic showing potential oversold conditions, there just might be one more technical bounce ahead. Conversely, bulls could start taking a nibble here, but with the big central bank event coming up, it’s probably good idea to wait for a break of the falling ‘highs’ around the 1.6550 areabefore considering a long position.
And last but not least, for those who aren’t interested in the RBNZ event, then we’ve got another descending triangle pattern on AUD/CHF that could already be breaking lower. With an absence of top tier events for both currencies, the technical traders could be in control of this pair all week, and a bounce from here to the broken support area around 0.7060 could draw in those technical players. With the general trend lower, this is a high probability setup, especially if global risk aversion sticks around to take interest away from high-yielders like the Aussie.