New Zealand Dollar, NZD/USD, NZD/JPY, NZD/CHF, GBP/NZD – Talking Points:
- NZD/USD approaching Ascending Channel resistance.
- NZD/JPY struggling to close January breakaway gap.
- GBP/NZD break below key support hints at further losses.
- NZD/CHF topside break of Symmetrical Triangle could open door to multi-month highs.
The New Zealand Dollar has an action-packed week ahead, with the Reserve Bank of New Zealand monetary policy meeting and manufacturing PMI data for October headlining the region’s economic docket. Here are the levels to watch for NZD/USD, NZD/JPY, GBP/NZD and NZD/CHF rates.
NZD/USD Daily Chart – Ascending Channel Resistance May Inspire Pullback
NZD/USD daily chart created using TradingView
NZD/USD rates may reverse lower in the short-term as price bounces away for Ascending Channel resistance and the RSI swerves away from overbought territory.
That being said, with price tracking firmly above all four moving averages and the MACD indicator climbing to its highest levels since mid-September, the path of least resistance remains skewed to the downside.
Nevertheless, a pullback towards the yearly open (0.6733) could be on the cards if support at the September high (0.6798) gives way, with a daily close below bringing Ascending Channel support and the 100-DMA (0.6590) into focus.
Conversely, a breach of psychological resistance at the 0.6900 mark may ignite a more impulsive topside push and carve a path to test the 38.2% Fibonacci (0.6955).
Retail trader data shows 24.46% of traders are net-long with the ratio of traders short to long at 3.09 to 1. The number of traders net-long is 27.83% higher than yesterday and 35.24% lower from last week, while the number of traders net-short is 2.16% lower than yesterday and 31.98% higher from last week.
We typically take a contrarian view to crowd sentiment, and the fact traders are net-short suggests NZD/USD prices may continue to rise.
Positioning is less net-short than yesterday but more net-short from last week. The combination of current sentiment and recent changes gives us a further mixed NZD/USD trading bias.
NZD/JPY Daily Chart – January Gap Stifling Buying Pressure
NZD/JPY daily chart created using TradingView
NZD/JPY rates may also be at risk of a short-term pullback, as buyers fail to close the January breakaway gap (72.18) and the RSI begins to slide back below 70.
However, with price perched constructively above support at the June high (71.67) and tracking firmly above all four moving averages, a retest of the psychologically imposing 72.00 mark is hardly out of the question.
Nonetheless, a pullback towards the September 9 daily close (70.96) looks the more likely scenario, with a break below probably generating a push towards the sentiment-defining 200-DMA (69.45).
On the other hand, an extended topside push may be in offing if support at the June high (71.67) remains intact, with a daily close above Ascending Channel resistance bringing the yearly high (73.35) into play.
GBP/NZD Daily Chart – Break Below Support Hints at Further Losses
GBP/NZD daily chart created using TradingView
GBP/NZD could be at risk of extending its retreat from the October high (1.9801), after slicing back below the trend-defining 50-DMA (1.9503) and key support at the 1.9300 mark.
Further losses appear in the offing if buyers fail to clamber back above resistance at the October low (1.9324), with a break below the November 9 low (1.9182) probably igniting a push to test support at the 78.6% Fibonacci (1.9024).
On the contrary, a daily close back above 1.9350 could generate a rebound towards the 50-DMA (1.9503) and 61.8% Fibonacci (1.9608).
NZD/CHF Daily Chart – Symmetrical Triangle Break Could Inspire Buyers
NZD/CHF daily chart created using TradingView
Finally, NZD/CHF is eyeing a push to test the post-crisis high set on June 9 (0.6226), after breaking to the topside of a Symmetrical Triangle consolidation pattern.
The development of the RSI and MACD indicator hints at swelling bullish momentum, which may generate a push to test the 50% Fibonacci expansion (0.6408) if buyers can hurdle the psychologically imposing 0.6300 level.
Conversely, a short-term pullback towards the September high (0.6186) may eventuate if the 38.2% Fibonacci (0.6290) successfully stifles buying pressure.
— Written by Daniel Moss, Analyst for DailyFX
Follow me on Twitter @DanielGMoss
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