NZD/USD Technicals
IFC Markets | Sep 21, 2017 08:46AM ET
New Zealand economy accelerated in the second quarter. Will the New Zealand dollar continue strengthening?
New Zealand economy accelerated in the second quarter: Q2 GDP rose 0.8% on quarter, up from upgraded 0.6% in first three months of 2017. Improving global economic performance is a major factor in boosting New Zealand economy as evidenced by higher export demand and improving terms of trade in last three quarters. The Reserve Bank of New Zealand kept the official cash rate on hold at 1.75% at its August 10 meeting. The central bank anticipated improved economic performance. The next RBNZ meeting is scheduled for September 28. No change in policy is expected as the central bank indicated monetary policy will remain accommodative for a considerable period and is reluctant to raise rates which may hurt economic growth. Improving economic growth is bullish for New Zealand dollar.
The daily NZD/USD has been correcting upward after hitting a 3-month low in the beginning of September on the daily chart. The price is above the 200-day moving average MA(200) which is rising.
- The Parabolic indicator gives a buy signal.
- The Donchian channel indicates uptrend: it is tilted upward.
- The MACD indicator gives a bullish signal.
- The stochastic oscillator is declining and has not reached the oversold zone.
We believe the bullish momentum will continue after the price closes above the upper Donchian boundary at 0.7434. A pending order to buy can be placed above that level. The stop loss can be placed below the last fractal low at 0.7182. After placing the order, the stop loss is to be moved every day to the next fractal low, following Parabolic signals. Thus, we are changing the probable profit/loss ratio to the breakeven point. The most risk-averse traders may switch to the 4-hour chart after the trade and place there a stop-loss moving it in the direction of the trade. If the price meets the stop loss level (0.7182) without reaching the order (0.7434), we recommend canceling the position: the market sustains internal changes which were not taken into account.
h3 Technical Analysis Summary/h3
- Position - Buy
- Buy stop - Above 0.7434
- Stop loss - Below 0.7182
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