NZD/USD Positioning For Yet Another Buy?

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The New Zealand dollar had a good week against the US dollar until it found sellers near 0.6800-10. The NZD/USD

pair is currently correcting lower, but it is heading towards a buy zone in the short term.

 

There is a crucial bullish trend line formed on the hourly chart of the NZD/USD pair, which could be seen as a

barrier for the bears if NZD continues to weaken. Moreover, there is a major support area around the 0.6750-90

area, which is coinciding with the trend line. Overall, we can say that there is a good support area forming near the

stated levels and we can consider buying in the short term.

 

Earlier today, the Caixin China Services PMI was released, which exceeded the market forecast and posted a

reading of 52.2 in March 2016. However, it failed to lift the market sentiment in the favor of risky assets like NZD.

However, it looks like NZD/USD is perfectly heading into our buy zone, and we should be prepared for a buy trade.

 

Technical Analysis

Buy Entry:

NZDUSD - H1

H1 – As mentioned, there is a bullish trend line and support area at 0.6750-90 formed on the hourly chart.

Moreover, there is also a bearish trend line on the same chart, which once broken may open the doors for more

gains.

 

First, we need to wait for the NZD/USD pair to reach our highlighted buying zone, and then if it breaks the bearish

trend line connecting the tops as shown in the chart we can enter a buy trade.

 

Target 1: 0.7100

Target 2: 0.7200

Stop Loss: 2 pips below the low before the break.

 

Fundamentals events and Economic news to watch out

Today during the Asian session, the Caixin China Services PMI™, which is based on data compiled from monthly

replies to questionnaires sent to purchasing executives was released by Markit Economics. The forecast was slated

for a minor rise, and the outcome exceeded the expectation.

 

The Caixin China Services PMI™ increased from the last reading of 51.2 to 52.2 in March 2016. The report

highlighted a strong rise mentioning, “the reading continued to point to a modest rate of expansion that was

slower than the series average. Meanwhile, manufacturing output returned to growth after an 11-month sequence

of stagnant or reduced production, though the rate of growth was only marginal“.

 

Overall, the result was positive, but there was hardly any boost for the risk sentiment. The NZD/USD pair moved

down and currently heading towards the highlighted trend line and support area where we can look for a buy

trade.

 

On the whole the US Dollar is waiting for the FOMC meeting minutes today. It can turn out to be a major risk event

for the greenback and could trigger a lot of moves.

 

Moreover, the U.S. MBA Mortgage Applications, which presents various mortgage applications was released by the

Mortgage Bankers Association. The report stated that there was a rise of 2.7% in the MBA Mortgage Applications,

compared with the last decline of 1%.

 

Let us wait for the right time to enter trade in NZD/USD, as the pair sets up as per our plan.

 

Good Luck with trading traders!

Yours,

Vladimir

 

 

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