Daily Insight: NZD/USD Potential for A Bearish Wedge
Matt Simpson | Oct 21, 2014 04:05AM ET
- Chinese economy growing at its slowest pace in 5yrs, coming in at 7.3%. Industrial production was above expectations at 9%.
- RBA released the monetary policy minutes but was a non-event price wise. Read the breakdown here
UP NEXT:
TECHNICAL ANALYSIS:
NZDUSD
Today was one of those days I was struggling to find anything of particular interest, mainly because many of the currency pairs are either stuck within horrid ranges, or have no pending catalysts.
Therefore I am now referring to D1 as this is something to keep in your watchlist.
Due to my analysis of the USD Index I suspect we will continue to see choppy range trading this week. However NZD/USD is now drifting towards the upper part of the 77-80c range, with bearish divergence and a Hanging Man on higher volume. This does suggest we may have an interim top approaching 80.50, the Jan low, and potential for a Bearish Wedge.
We do not have data from NZ until Thursday and Friday which includes Trade Balance and CPI. Any soft data here should see NZD/USD back within range. However before this we also have US inflation data which is strong could see the topping sooner or later.
A break above 80.50 invalidates the analysis so we can place a stop above here as we await the catalysts. This then leaves the decision of how to enter. Picking tops can be tricky as there is always room for one more high, so I would prefer to set a sell limit below 80.50 with a stop well inside this key level, which could achieve a minimum of a 2:1 reward/risk ratio.
Get The News You Want
Target 1: 0.786
Target 2: 0.77
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.