By Andria Pichidi - November 15, 2018
The Kiwi is doing extremely good the past month, and more precisely after the inflation release on October 16, above expectations at 0.9% in Q3 after the 0.4% q/q rise in Q2. Recently the employment gain on November 7, was well in excess of projections, while the drop in the jobless rate was contrary to projections for a tick higher, supported New Zealand Dollar further, especially due to the global uncertainty, in the political,/geopolitical or even trade front.
Today meanwhile, the backdrop of mostly firmer stock markets in Asia, and a rise in US Equity index futures, were also a bullish lead for the relatively higher beta antipodean currency. Outperforming the Euro, at a time in which the Europe remains fraught with risks, as the brinkmanship between Italy and the EU in terms of the budget continues to play out, Brexit uncertainty remains and there are signs of flagging economic growth momentum in the Eurozone.
EURNZD continue its strong way down and broke today 4-month low at 1.6567. This breakout below the 1.6630 Support level, was a key move in the long term, as it represents the 38.2% Fibonacci retracement since 2017 low but also strong 6-month Support between November 2017- April 2014, before the rebound of the pair up to 1.7900 area. Therefore, as the pair moves for the 3rd consecutive week strongly to the downside, ready to complete 3 black weekly craws, simply adds to the constant deterioration in the outlook.
Taking into consideration the constant declines of the price but also on momentum indicators, the pair remains strongly to the bearish outlook, without nearterm corrections signs yet.
In the weekly basis, the RSI is at 35 looking to the downside, following a smooth negative slope since Octiber. MACD lines are decreasing to the downside below signal line, confirming the increase of negative bias. In the daily chart, RSI looks oversold. However, the bearish crossover of 20-day SMA to 200-day SMA, and as the MACD keeps extending to the downside, suggest that bears have the ultimate control.
The break of 4-month low, opened today the doors for the 1.6235-1.6360 area, set at the latest swing lower ( November 2017) and the 50% Fibonacci retracement level. Further gains could then target the 61.8% Fib. level at 1.5830.
However, as the pair remains in a sharp bearish price action, a clear reversal to the upside could only be confirmed with a move above the confluence of 50-week SMA, 20-day SMA and 23.6% Fib. level at 1.7100- 1.7170 area. This could open the doors for the continuation of the uptrend again.
As mentioned, in a wider picture, the pair remains in a bearish trend, while it confirmed 5 Elliott waves movements and it currently formed a corrective wave to the downside.
Daily chart: https://www.screencast.com/t/9vifbo0m
Click here to access the HotForex Economic Calendar
Andria Pichidi
Market Analyst
HotForex
Disclaimer: This material is provided as a general marketing communication for information purposes only and does not constitute an independent investment research. Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of buying or selling of any financial instrument. All information provided is gathered from reputable sources and any information containing an indication of past performance is not a guarantee or reliable indicator of future performance. Users acknowledge that any investment in FX and CFDs products is characterized by a certain degree of uncertainty and that any investment of this nature involves a high level of risk for which the users are solely responsible and liable. We assume no liability for any loss arising from any investment made based on the information provided in this communication. This communication must not be reproduced or further distributed without our prior written permission.
The Kiwi is doing extremely good the past month, and more precisely after the inflation release on October 16, above expectations at 0.9% in Q3 after the 0.4% q/q rise in Q2. Recently the employment gain on November 7, was well in excess of projections, while the drop in the jobless rate was contrary to projections for a tick higher, supported New Zealand Dollar further, especially due to the global uncertainty, in the political,/geopolitical or even trade front.
Today meanwhile, the backdrop of mostly firmer stock markets in Asia, and a rise in US Equity index futures, were also a bullish lead for the relatively higher beta antipodean currency. Outperforming the Euro, at a time in which the Europe remains fraught with risks, as the brinkmanship between Italy and the EU in terms of the budget continues to play out, Brexit uncertainty remains and there are signs of flagging economic growth momentum in the Eurozone.
EURNZD continue its strong way down and broke today 4-month low at 1.6567. This breakout below the 1.6630 Support level, was a key move in the long term, as it represents the 38.2% Fibonacci retracement since 2017 low but also strong 6-month Support between November 2017- April 2014, before the rebound of the pair up to 1.7900 area. Therefore, as the pair moves for the 3rd consecutive week strongly to the downside, ready to complete 3 black weekly craws, simply adds to the constant deterioration in the outlook.
Taking into consideration the constant declines of the price but also on momentum indicators, the pair remains strongly to the bearish outlook, without nearterm corrections signs yet.
In the weekly basis, the RSI is at 35 looking to the downside, following a smooth negative slope since Octiber. MACD lines are decreasing to the downside below signal line, confirming the increase of negative bias. In the daily chart, RSI looks oversold. However, the bearish crossover of 20-day SMA to 200-day SMA, and as the MACD keeps extending to the downside, suggest that bears have the ultimate control.
The break of 4-month low, opened today the doors for the 1.6235-1.6360 area, set at the latest swing lower ( November 2017) and the 50% Fibonacci retracement level. Further gains could then target the 61.8% Fib. level at 1.5830.
However, as the pair remains in a sharp bearish price action, a clear reversal to the upside could only be confirmed with a move above the confluence of 50-week SMA, 20-day SMA and 23.6% Fib. level at 1.7100- 1.7170 area. This could open the doors for the continuation of the uptrend again.
As mentioned, in a wider picture, the pair remains in a bearish trend, while it confirmed 5 Elliott waves movements and it currently formed a corrective wave to the downside.
Daily chart: https://www.screencast.com/t/9vifbo0m
Click here to access the HotForex Economic Calendar
Andria Pichidi
Market Analyst
HotForex
Disclaimer: This material is provided as a general marketing communication for information purposes only and does not constitute an independent investment research. Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of buying or selling of any financial instrument. All information provided is gathered from reputable sources and any information containing an indication of past performance is not a guarantee or reliable indicator of future performance. Users acknowledge that any investment in FX and CFDs products is characterized by a certain degree of uncertainty and that any investment of this nature involves a high level of risk for which the users are solely responsible and liable. We assume no liability for any loss arising from any investment made based on the information provided in this communication. This communication must not be reproduced or further distributed without our prior written permission.
Comment:
EURNZD Medium-TermBack in November, we identified a very interesting pattern in EURNZD, the famous Elliott Wave pattern. In November, the pair was in a bearish trend, forming a corrective "A" wave to the downside, following a confirmation of 5 Elliott Waves movements (the dominant Trend was placed between January 2017 - September 2018).Since then the Elliott's model has been fully deployed, as the asset illustrated a rebound from 1.6360 on December 5, the "B" wave in the Elliott's corrective 3-wave trend. The B-wave ended on January 3, after it peaked at a 1.7207 high. From the time of that reversal, the asset entered the 3rd phase of the Elliott wave model, i.e. "C" wave, by trading in a down channel, with the latest low swing at 1.6292. The breach of this area confirmed our forecasts as stated in November's post below:Today’s break of the 4-month low, opened the doors for the 1.6235-1.6360 area, set at the latest swing lower (November 2017) and the 50% Fibonacci retracement level. Further gains could then target the 61.8% Fib. level at 1.5830.Despite Kiwi's tumble by 1.5% on RBNZ's dovish turn overnight, the above statement remains strongly alive. The EURNZD is holding within a down channel, by forming lower highs in the medium term, with attention on the downside, on the already re-opened area at 1.6235-1.6360, with risk for further declines rising. Momentum indicators comply with this 5-month bearish outlook, as RSI and MACD are negatively configured, in the daily and weekly frame, suggesting the continuation of the fall.On the break of this area, the next leg lower could be found between the 1.5835-1.5890 area, which presents the 127.2 Fibonacci retracement level set on wave A and the 61.8% Fib. level on the 2017-2018 rally.Theoretically however, we need to mention that the "C" wave is typically at least as large as wave A and often extends to 1.618 times wave A or beyond. This could lead below the 1.5400 barrier. In the near term, correction to the upside could occur as the overall bias is negative, with immediate Resistance at 1.6600 and 1.6740.Click here to access the Economic CalendarAndria PichidiMarket AnalystDisclaimer: This material is provided as a general marketing communication for information purposes only and does not constitute an independent investment research. Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of buying or selling of any financial instrument. All information provided is gathered from reputable sources and any information containing an indication of past performance is not a guarantee or reliable indicator of future performance. Users acknowledge that any investment in FX and CFDs products is characterized by a certain degree of uncertainty and that any investment of this nature involves a high level of risk for which the users are solely responsible and liable. We assume no liability for any loss arising from any investment made based on the information provided in this communication. This communication must not be reproduced or further distributed without our prior written permission.
