NZDUSD has been climbing higher after a good employment report earlier in the Asian session. However, the pair may create a short term top, in my opinion. There is a bearish hidden divergence forming on the 4 hour chart as shown below, which adds value to our bearish view in the short term. So, we will look for a sell opportunity for NZDUSD as RSI is approaching to the extreme level on the 4 hour chart.
Looking at the 1 hour chart, the pair is losing momentum as the RSI is around the extreme levels. There are several resistances on the way up such as 0.8395, 0.8410 and 0.8440 as plotted in the chart shown below. We will look to enter a sell trade once the pair makes a stop at any of these levels, forms a bearish hidden divergence on 4 hour chart and continuing divergence on the 1 hour chart and creates a bearish candle pattern on the 1 hour chart. We will also observe MACD for a tick to the downside before entering into a trade.
Initial target should be around the previous low around 0.8220 as shown below, and final target could be around the gap close of 0.8140. Stop should be placed above the next major resistance around 0.8450.
Reviewing yesterday’s events and trades
US dollar is under some correction or retracement after a consecutive six-day rally. US ISM Non-manufacturing index was released yesterday, which climbed higher to 55.4 beating the expectations of 54.0. Furthermore, UK services PMI registered one of the biggest surge in the last 16 years as it climbed higher to 62.5 from 60.3. After the data release, GBPUSD jumped across the board, and GBPUSD traded as high as 1.6060 yesterday. New Zealand dollar is also trading higher after the employment data came better than expected in the Asian session.
Fundamental Outlook for the day
A lot of fundamental data are scheduled from the Euro zone and the UK today. Starting with UK Halifax House Price Index, Spanish Services PMI, Italian Services PMI, German Services PMI, Euro zone composite Services PMI, UK industrial production and manufacturing data and Euro zone retail sales data. Later in the NY session, we have US challenger jobs data, Canadian Building permits, NIESR UK GDP estimate and US CB leading index scheduled. Furthermore, Australian employment data are also lined up in the next Asian session. A lot of fundamental events are scheduled throughout the day, so we should be very careful with our trade setups.
This analysis is taken from today’s Daily Market Forecast, which also includes trade opportunities on: EURUSD, EURGBP, EURNZD, AUDNZD, USDCAD, EURCHF and DAX .
Get it HERE: Vladimir’s Markets Forecast
Trade carefully friends. Happy trading!
