New Zealand Dollar: NZD/USD (NZD=X) All eyes on Fed

New Zealand Dollar: NZD/USD (NZD=X) All eyes on Fed

New Zealand Dollar: NZD/USD (NZD=X) All eyes on Fed

NZD/USD has posted modest losses on Wednesday, erasing the short-lived gains we saw on Tuesday. In the Asian session, the pair is trading at 0.6337, down 0.36% on the day.

Ahead – New Zealand GDP

Weak global conditions and the ongoing U.S-China trade war have taken a toll on the New Zealand economy, which is heavily dependent on trade and exports.  After back-to-back gains of 0.6% in the previous two quarters, the markets are braced for slower growth in Q2, with a forecast of 0.4%. If actual growth does not exceed the estimate, investors may react negatively and the NZ dollar could lose ground.

All eyes on Fed

The Federal Reserve holds its monthly policy meeting later in the day, and there is uncertainty as to whether the Fed will press the rate trigger at today’s meeting, or wait a month or two. The CME Group is predicting a 56% chance of a 1/4 point rate cut. If the Fed does press the rate trigger, we could see some losses for the U.S  dollar.

NZD/USD Technical Analysis

Although NZD/USD continues to be rangebound, there is strong pressure on support at 0.6325. This line has managed to remain intact since September 3, but was tested on Tuesday. This pattern could continue on Wednesday. If the pair can finally break this line, there is room for a downward breakout by the pair. On the upside, there is immediate resistance at 0.6360. Above, 0.6425 is a major resistance line.

Technical Indicators

Overall, the bias in prices is: Downwards.

The projected upper bound is: 0.64.

The projected lower bound is: 0.62.

The projected closing price is: 0.63.

Candlesticks

A big black candle occurred. This is bearish, as prices closed significantly lower than they opened. If the candle appears when prices are “high,” it may be the first sign of a top. If it occurs when prices are confronting an overhead resistance area (e.g., a moving average, trendline, or price resistance level), the long black candle adds credibility to the resistance. Similarly, if the candle appears as prices break below a support area, the long black candle confirms the failure of the support area.
During the past 10 bars, there have been 4 white candles and 6 black candles for a net of 2 black candles. During the past 50 bars, there have been 22 white candles and 28 black candles for a net of 6 black candles.

An engulfing bearish line occurred (where a black candle’s real body completely contains the previous white candle’s real body). The engulfing bearish pattern is bearish during an uptrend. It then signifies that the momentum may be shifting from the bulls to the bears.

If the engulfing bearish pattern occurs during a downtrend (which appears to be the case with FOREX NZD=), it may be a last engulfing bottom which indicates a bullish reversal. The test to see if this is the case is if the next candle closes above the bottom the current (black) candle’s real body.

Momentum Indicators

Momentum is a general term used to describe the speed at which prices move over a given time period. Generally, changes in momentum tend to lead to changes in prices. This expert shows the current values of four popular momentum indicators.

Stochastic Oscillator

One method of interpreting the Stochastic Oscillator is looking for overbought areas (above 80) and oversold areas (below 20). The Stochastic Oscillator is 15.4821. This is an oversold reading. However, a signal is not generated until the Oscillator crosses above 20 The last signal was a sell 4 period(s) ago.

Relative Strength Index (RSI)

The RSI shows overbought (above 70) and oversold (below 30) areas. The current value of the RSI is 34.71. This is not a topping or bottoming area. A buy or sell signal is generated when the RSI moves out of an overbought/oversold area. The last signal was a buy 11 period(s) ago.

Commodity Channel Index (CCI)

The CCI shows overbought (above 100) and oversold (below -100) areas. The current value of the CCI is -70. This is not a topping or bottoming area. The last signal was a sell 5 period(s) ago.

MACD

The Moving Average Convergence/Divergence indicator (MACD) gives signals when it crosses its 9 period signal line. The last signal was a buy 10 period(s) ago.

Rex Takasugi – TD Profile

FOREX NZD= closed down -0.004 at 0.632. Volume was 27% below average (neutral) and Bollinger Bands were 32% narrower than normal.

Open     High      Low     Close     Volume___
0.636 0.636 0.630 0.632 25,404
Technical Outlook 
Short Term: Oversold
Intermediate Term: Bullish
Long Term: Bearish
Moving Averages: 10-period     50-period     200-period
Close: 0.64 0.65 0.67
Volatility: 8 8 9
Volume: 26,237 32,885 38,971

Short-term traders should pay closer attention to buy/sell arrows while intermediate/long-term traders should place greater emphasis on the Bullish or Bearish trend reflected in the lower ribbon.

Summary

FOREX NZD= is currently 5.1% below its 200-period moving average and is in an upward trend. Volatility is Our volume indicators reflect moderate flows of volume out of NZD= (mildly bearish). Our trend forecasting oscillators are currently bullish on NZD= and have had this outlook for the last 4 periods.

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