Today we have an interesting opportunity for NZDUSD as I think the pair has breached an important support level, and can move lower from here. Remember, there is also a gap to close at around the 0.8120 level, as shown in the daily chart below. So, I think we should look to sell any rallies, and target at least 80-100 pips.
Looking at the 4 hour chart of NZDUSD, the pair has broken an important wedge support, as can be seen below. I think this break is critical, as the pair is struggling to gain momentum to the upside even after the New Zealand’s GDP data, which came better than expected. So, if the pair retraces from here or trades a bit higher, then we will enter a sell trade. This scenario is highlighted in the 4 hour chart below. The levels to watch for the entry are 0.8210 and 0.8220.
Initial target should be around the 0.8120 level, and final target could be around the 0.8060 level. Stop should be placed above the wedge resistance at around the 0.8280/90 level.
Reviewing yesterday’s events and trades
Yesterday, as mentioned in a post turned out be an exciting day. The Fed started the much awaited tapering, and surprised some people who were not expecting the fed to taper in December. The fed lowered their monthly purchases from 85 to 75 billion. Another thing to note is that the fed promised to taper in the coming months also. So, if the data continue to impress, then we may see the fed tapering again in March. All the major pairs dropped after the event, and the US dollar was seen gaining a lot of ground yesterday.
Fundamental Outlook for the day
Today, in the European session, the UK retail sales data will be released. The market is expecting a rise in the retail sales, and if the outcome is positive, then the pound pairs can recover some of the lost ground. Later, in the NY session, the US initial jobless claims, existing home sales data and Philadelphia fed manufacturing index will be released. Remember, the volatility and liquidity may decrease as we are coming closer to the holidays. Let’s see how the major pairs end this week. I think we can see some more dollar gains in the coming sessions. However, a recovery is also possible in the short term for the risk.
This analysis is taken from today’s Daily Market Forecast, which also includes trade opportunities on: EURUSD, AUDUSD, AUDNZD, EURGBP, USDJPY, USDCAD, EURCHF and GOLD.
Get it HERE: Vladimir’s Markets Forecast
Happy holiday friends!
