Published On: Wed, Feb 22nd, 2017

Bias flips to the upside for NZDUSD



Struggling a bit this morning for a major pair that I really want to write about (forecast). This is mainly down to the US dollar. Remember, we are long term bears and are predicted to be in the last leg higher (CD). A break above 101.75 (the February 15 high) and, technically, the leg could complete at any point. We are looking for sell signals between 102.05 (61.8% pullback) and 102.83, so a pretty wide range. 

USD index – complex correction

Source: Saxo Bank 

There are some major pairs, GBPUSD in particular, that look to have taken the USD bearish bias already. I am wondering if NZDUSDis going to be next. We have been long term bulls in this pair for some time with the move lower from 0.7373 always regarded as corrective. 

Monthly – we have seen mixed trading for the last six months while we consolidate close to 0.7200, an area that has been pivotal since 2005. We saw strong gains in January and this resulted in a Marabuzo level of 0.7118 being posted. 

Source: Saxo Bank

Weekly – in our last report on this pair we noted a support zone at 0.7161-0.7070. Tuesday’s spike lower reached 0.7128 (just above the Marabuzo).

Source: Saxo Bank 

Daily – the daily chart highlights an expanding-wedge formation that has an eventual bias to break to the upside. (False breakout at the start of February). The daily Ichimoku cloud has acted as support once more.

Source: Saxo Bank

Intraday (six-hours) – the last impulsive rally continued to the 423.6% extension level of 0.7352 (from 0.6860-0.6976). This is common on commodity based currencies pairs. We have since seen a corrective move to the downside. With Tuesday’s low (0.7128) being below wave AB (0.7133), we could have completed the correction (AB-CD). 

Source: Saxo Bank 

Intraday (two-hours) – breaking down to a shorter timeframe and we can see the complex corrective wave structure of 5/3/5 (AB-CD).

Source: Saxo Bank

Intraday (15 minutes) – We do not normally break down to such a short timeframe but, with signals being far from strong, we thought we would highlight the prime long entry level. Again, a bullish 5 wave structure, which adds weight to the outlook. Scope for a move down to 0.7146 (61.8% pullback level). With our bespoke support sitting at 0.7143, this is a prime long entry. 
Source: Saxo Bank

As noted, signals are far from strong but we do have the potential of this be a long-term base so risk/reward is extremely good. 

Management and risk description


Entry: 0.7145


Target: 0.7300 and 0.7500

Time horizon: today to trigger

— Edited by Jack Davies

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