NZD/USD: Pair Has Bottomed Out, As Rounding Bottom Has Formed On 4 Hourly Chart

October 16, 2018


By observing the daily technical chart we can see that every new swing was making successively lower lows and lower highs on the daily technical chart and pair has made a low of 0.6423 level last week and after arriving at that level it bounced sharply towards north side. The NZD/USD pair has charted a bull flag on the 4 hourly chart, which is a continuation pattern, meaning a break above the flag resistance, currently seen at 0.6600, would revive the rally and would allow a rally to 0.6700.The prospects of bull flag breakout would weaken if the pair finds acceptance below the 100-hour exponential moving average (EMA) 0.6495. NZD/USD has rallied on the New Zealand CPI beat and is en route for a test of the 61.8% Fibonacci retracement at highs of 0.6594. NZD/USD is currently trading at 0.6575 having printed a post data high of 0.6589, from a low of 0.6494. 


The Pair has taken flight after the NZ CPI data arrived at 0.9% q/q vs. expected 0.7% and much better than prior 0.4% q/q – (1.9 % y/y – higher than expected 1.7% y/y, prior 1.5%). This data will have diminished ideas of a rate cut in the near future from the RBNZ although rallies may be short-lived and interpreted as transitory. The USD retreated overnight on the back of trade tensions and softer US data and this cross is likely to continue to be buffeted by global factors, like the FOMC minutes out later this week.


Well the current stance shows a bullish momentum and pair has crossed the moving average, the 0.6600 can be a stumble block for bulls and a valid breakout of this level will open the way towards the 0.6700. The way bulls are reacting it seems like bulls have started the journey and they are not going to stop as early, we are hoping that bulls will test the 0.6700 level at least.


From technical prospective we can see that pair has bottomed out and heading towards north side as a rounding bottom pattern has been formed on the 4 hourly chart. Two consecutive bullish marabuzo candlesticks above the moving average line are supporting the bulls. Odds are in favor of bulls and intra-day bias remains bullish on the pair as long as 0.6500 level remains intact. The RSI is also supporting the bulls from positive territory  and a bullish crossover has been occurred on the MACD indicator which is also generating bullish signal.


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