New Zealand Dollar: NZD/USD (NZD=X) continues to weaken on expectations of further rate cuts by the Reserve Bank of New Zealand
The New Zealand Dollar continues to weaken on expectations of further rate cuts by the Reserve Bank of New Zealand even after central bankers shocked the markets with a surprise 50-basis point rate cut on August 7. Early Thursday, the Kiwi is also being dragged lower by the weakening Chinese yuan which is widely viewed as China’s retaliation to U.S. tariffs.
Daily Technical Analysis
The main trend is down according to the daily swing chart. It took 11 trading sessions, but the NZD/USD finally took out its spike low at .6378 from August 7. This low was put in after the RBNZ slashed rates more than expected. The move also signaled a resumption of the downtrend.
The main trend will change to up on a trade through .6791. This is not expected over the near-term, however. The only chart pattern that can save this market from lower prices at this time is a closing price reversal bottom. This chart pattern will not indicate a change in trend either, but it will signal that the buying is greater than the selling at current price levels. This could trigger a 2 to 3 day counter-trend rally.
The minor trend is also down. A trade through .6588 will change the minor trend to up. This will shift momentum to the upside.
The new short-term range is .6588 to .6372. Its 50% level or pivot at .6480 is resistance.
The new main range is .6791 to .6378. Its retracement zone at .6582 to .6631 is additional resistance.
Overall, the bias in prices is: Downwards.
Note: this chart shows extraordinary price action to the downside.
By the way, prices are vulnerable to a correction towards 0.65.
The projected upper bound is: 0.65.
The projected lower bound is: 0.63.
The projected closing price is: 0.64.
A white body occurred (because prices closed higher than they opened).
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 27 white candles and 23 black candles for a net of 4 white candles.
A bullish harami occurred (where the current small white body is contained within an unusually large black body). During a downtrend (which appears to be the case with FOREX NZD=) this pattern implies an end to the decline as the bears appear to have exhausted themselves.
During an uptrend the bullish harami pattern is bearish as the bears appear to be gaining strength as the bulls weaken.
A spinning top occurred (a spinning top is a candle with a small real body). Spinning tops identify a session in which there is little price action (as defined by the difference between the open and the close). During a rally or near new highs, a spinning top can be a sign that prices are losing momentum and the bulls may be in trouble.
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.
One method of interpreting the Stochastic Oscillator is looking for overbought areas (above 80) and oversold areas (below 20). The Stochastic Oscillator is 8.7500. This is an oversold reading. However, a signal is not generated until the Oscillator crosses above 20 The last signal was a buy 14 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 26.01. This is where it usually bottoms. The RSI usually forms tops and bottoms before the underlying security. A buy or sell signal is generated when the RSI moves out of an overbought/oversold area. The last signal was a buy 6 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 -153.This is an oversold reading. However, a signal isn’t generated until the indicator crosses above -100. The last signal was a buy 8 period(s) ago.
The Moving Average Convergence/Divergence indicator (MACD) gives signals when it crosses its 9 period signal line. The last signal was a sell 21 period(s) ago.
Rex Takasugi – TD Profile
FOREX NZD= closed up 0.000 at 0.637. Volume was 99% below average (consolidating) and Bollinger Bands were 29% wider than normal.
Open High Low Close Volume___
0.637 0.637 0.636 0.637 310
Short Term: Oversold
Intermediate Term: Bearish
Long Term: Bearish
Moving Averages: 10-period 50-period 200-period
Close: 0.64 0.66 0.67
Volatility: 5 9 9
Volume: 27,499 34,404 40,899
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.
FOREX NZD= is currently 5.0% below its 200-period moving average and is in an downward trend. Volatility is low as compared to the average volatility over the last 10 periods. Our volume indicators reflect moderate flows of volume out of NZD= (mildly bearish). Our trend forecasting oscillators are currently bearish on NZD= and have had this outlook for the last 18 periods. Our momentum oscillator is currently indicating that NZD= is currently in an oversold condition.
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