NZD/USD breaches 200-hour SMA

FX:NZDUSD   New Zealand Dollar / U.S. Dollar
The Kiwi was limited by the 55– and 100-hour SMAs for most of the session on Tuesday. This lack of momentum, however, was disrupted late in the evening when solid labour data put an upward pressure on the rate towards the 0.6920 mark.

Given the characteristics of this move, the rate is seemingly forming a retracement from the lower channel boundary breached on October 24.

Technical indicators are neutral in this session, however, it is more likely that the pair is tended slightly southwards down to the 0.6860/40 area where the aforementioned 55– and 100-hour SMAs are located.

Subsequently, a reversal might occur, as the Kiwi is likely to respect the bottom boundary of the newly-established short-term channel up—a move that would likewise be in line with the senior descending channel .

The 55-, 100– and 200-hour SMAs have been leading the Kiwi’s movement during the past three sessions. As all three moving averages are located nearby, the pair has failed to initiate a new wave down towards the bottom boundary of the junior channel. Such stickiness to this line suggests a possibility of a norther breakout up to the weekly R1 or the monthly PP at 0.6964 and 0.6980, respectively.

Technical indicators, however, are tended towards a more bearish sentiment. In case this scenario is to occur, the subsequent fall should not exceed the 0.6890 area where the weekly PP and the 110– and 200-hour SMAs are located.

By and large, the upcoming week is likely to continue with the pair’s appreciation towards the senior channel.

The New Zealand Dollar continues to trade within a junior ascending channel. The rate has nevertheless failed to reach the lower channel boundary for the fourth consecutive session, being restricted either by the 55-, 100– or 200-hour SMA.

Meanwhile, technical indicators indicate that the latter might actually be breached during the following hours, thus pushing the rate down to the 0.6840 area where the weekly S1 is located.

In case this scenario does not occur, the rate is unlikely to move past the weekly R1 or the monthly PP circa 0.6960.

By and large, it is expected that the Kiwi could gain strength against the US Dollar within this week and try to approach the upper boundary of the senior channel.
Comment: Near midnight from Monday to Tuesday the New Zealand Dollar met with the resistance of the long term channel up pattern against the US Dollar. The event resulted in a Kiwi decline against the Greenback.

However, by the middle of Tuesday’s London trading session the rate had found support in the combined strength of the 55 and 100– hour simple moving averages. Due to that reason a rebound up to the 0.6960 level became possible, if the SMAs manage to push the rate higher.

However, in accordance with the technical patterns, the pair should fall down to the 0.6900 mark.

The New Zealand Dollar continues to trade in an ascending channel formed on October 25.

After testing its upper boundary early on Tuesday, the rate began a new wave down. This movement, however, was disrupted by the weekly PP that reversed the rate slightly below the 0.69 mark.

The Kiwi was testing the 55– and 100-hour SMAs for several hours, but eventually gained momentum to pushed even higher.

It should be noted that the Reserve Bank of New Zealand is to publish its rate statement, as well as conduct a press conference at 2000GMT and 2100GMT, respectively.

These fundamental events are likely to shake the market in either direction. The channel boundaries are not located nearby. Thus, it is likely that the pair remains in its bounds after the initial reaction has allayed.

The Kiwi was trading in a calm manner against the US Dollar prior to the RBNZ’s Rate Statement late on Wednesday. The Kiwi spiked to a two-week high after the Bank’s official cash rate was left unchanged at 1.75%.

This strong surge was supported by the RBNZ revising upwards its inflation targets, thus signalling to an earlier interest rate hike than previously expected.

From technical point of view, the rate entered a short-term movement sideways after the announcement, thus testing the upper line of the junior channel.

By and large, it is likely that the Kiwi does not change its position much during the following 24 hours and thus remain slightly below the monthly PP at 0.6983 until the upper boundary of the senior pattern is reached.

The New Zealand Dollar was testing the upper boundary of the junior channel for several hours yesterday. This line proved to be a strong resistance which subsequently sent the Kiwi for a decline down to the 55– and 100-hour SMAs.

The dotted line on the chart demonstrates the diminishing trading range within the junior channel itself. Thus, the following trading hours will show if it holds the pair - together with the 100-hour SMA.

The rate’s upward movement during the past two weeks suggests that the rate could eventually break out to the upside. The senior channel might be reached by mid-Monday already. That would locate the Kiwi near the 0.69 mark at the time.
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