Kiwi Sentiment Shifts Towards Shorts

Last week, the Kiwi hit the top end of a target range we have been watching. How much, if any move is left?

On the heels of the RBNZ 25 basis point rate cut today, some cracks are beginning to show up in the NZDUSD foundation. Governor Wheeler suggests this is it regarding cutting for a while and prices have rallied today. 6680 may provide resistance in the short term.

The Elliott Wave picture shows we are approaching the ending wave of an ending wave (medium term bullish). There are several wave relationships showing up just below current pricing levels (medium term bullish). SSI (Sentiment) is shifting heavily towards shorts (bullish). The big bright spot for short traders is that on balance volume has been confirming this move lower. So the variables are a mixed bag with the indicators shown below shifting towards the bullish tone.

Here is a summary of the main variables/indicators we watch:

Elliott Wave Count - we appear to be in wave (iv) of of C of (Y) - this means we are approaching ending waves at multiple degrees (medium term bullish)

Wave Relationships - we look for harmony in the wave measurements and several show up in .6100-.6370. This includes shorter term patterns to 4 year patterns. (short term bearish; medium term bullish)

Wave C = Wave A = .6103 (12 month pattern)

circle = circle - * 1.618 = .6166

Circle subdivides the impulse of wave C = .6370

Wave Y = 1.618 * wave W = .6370 (4 year pattern)

SSI - current reading is +1.5 and this is half of the +3 reading over the past several weeks. Long positions are down 14.9% from last week and short positions have grown +82% over last week. Traders are clearly shifting to the short side. SSI is a contrarian indicator. (bullish)

OBV - Volume has thus far confirmed the recent moves lower. This suggests prices may continue to follow the trend down. (bearish)

As you can see, these indicators and variables are starting to shift towards bulls. Watch the wave relationship zones noted above.