NZDUSD Repost - 0.73 Level for H&S
In hindsight - that yellow arrow was not such a good idea as it is now blocking the view of PA in previous post.
Brief recap:
PA broke though 0.72 so likely to head for 0.73 for second shoulder of POTENTIAL S&H pattern - reminder that it is potential just like in GBPAUD post.
NZD is in a strange place right now so would warn against trading NZ news events - in particular RBNZ announcements. Wheeler has made it crystal clear - all RBNZ decision is now based on achieving annual inflation target range of 2%-3% - currently 0.2% albeit less than expected quarterly decreases. With a nominal rate of 2.0 - there is still plenty of room to move.
All interest rate moves have been well telegraphed by Wheeler and markets have been expecting another decrease in rates for some time now; same as FED rate rise in December. Do not be surprised of inversed PA from seemingly negative news events coming out of NZ as tradable inflation and commodity based CPI will be under the most scrutiny and not the annual figure of CPI and this should be closely monitored for those that are data savvy. As such - factors beyond NZ will be key drivers for this pairs moves.
3 things to look out for:
1) FED decision and minutes will by far overshadow RBNZ releases - US data loose steam for Dec rate hike but still lately. Likely nothing in November due to election risk. Political fatigue setting in as it has been more 'full on' this election compared to others in the past.
2) Commodity rebound - It just is - even though NZ doesn't have much in mineral exports so I'll say no more on this.
3) Last but not least - China - NZ's largest trading pattern. China's economy and domestic demand weighs heavy on NZD. Xi's goal of shifting from export to internal consumption economy = increase trade with AU and NZ etc bla bla.
Important thing to note is that above 2 will act as compounding factors towards China's impact on NZD as USD interest rate will ( if increased ) will put more pressure of Yuan depreciation and China commodity link blah blah. Its very close to what Yuan was pegged to USD in 2008 so might be a good idea heed some of the murmurs starting to resurface about China - again.
Whatever the case - near term short entry around 0.73 ~ 0.74 for sub .069 targets.
Wait and see
Good luck
Brief recap:
PA broke though 0.72 so likely to head for 0.73 for second shoulder of POTENTIAL S&H pattern - reminder that it is potential just like in GBPAUD post.
NZD is in a strange place right now so would warn against trading NZ news events - in particular RBNZ announcements. Wheeler has made it crystal clear - all RBNZ decision is now based on achieving annual inflation target range of 2%-3% - currently 0.2% albeit less than expected quarterly decreases. With a nominal rate of 2.0 - there is still plenty of room to move.
All interest rate moves have been well telegraphed by Wheeler and markets have been expecting another decrease in rates for some time now; same as FED rate rise in December. Do not be surprised of inversed PA from seemingly negative news events coming out of NZ as tradable inflation and commodity based CPI will be under the most scrutiny and not the annual figure of CPI and this should be closely monitored for those that are data savvy. As such - factors beyond NZ will be key drivers for this pairs moves.
3 things to look out for:
1) FED decision and minutes will by far overshadow RBNZ releases - US data loose steam for Dec rate hike but still lately. Likely nothing in November due to election risk. Political fatigue setting in as it has been more 'full on' this election compared to others in the past.
2) Commodity rebound - It just is - even though NZ doesn't have much in mineral exports so I'll say no more on this.
3) Last but not least - China - NZ's largest trading pattern. China's economy and domestic demand weighs heavy on NZD. Xi's goal of shifting from export to internal consumption economy = increase trade with AU and NZ etc bla bla.
Important thing to note is that above 2 will act as compounding factors towards China's impact on NZD as USD interest rate will ( if increased ) will put more pressure of Yuan depreciation and China commodity link blah blah. Its very close to what Yuan was pegged to USD in 2008 so might be a good idea heed some of the murmurs starting to resurface about China - again.
Whatever the case - near term short entry around 0.73 ~ 0.74 for sub .069 targets.
Wait and see
Good luck
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