Analys från DailyFX
NZD/USD Levels to Know Ahead of Dairy Auction, US Services ISM
Talking Points:
– NZD/USD failed to close above current daily resistance for the last seven attempts
– Global Dairy Auction could be key for Kiwi, ISM could pore cold water on Fed hike bets
– Kiwi might stay elevated in current trading environment
The NZD/USD is trading higher, currently above the July high at 0.73247, but the pair failed to print a daily close above the level for the last seven attempts.
The combination of key technical levels, and important event risk could prove interesting as the Global Dairy Auction and US Services ISM are set to hit the wires.
Against this backdrop we will form our outlook and look to find short term trading opportunities using different tools such as the Grid Sight Index (GSI) indicator.
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The New Zealand Dairy Auction numbers are due to hit the wires around the start of US trading hours. The auction is set to start at 12:00 GMT, but official timing of the release varies, which might imply that traders should proceed with caution at those hours.
The last auctions saw the average price rise by 12.7% to $2,731. The dairy industry is New Zealand’s biggest export earner, accounting for more than 29% of the country’s exports, making this an important indicator to watch as rising dairy prices could potentially limit the scope of the RBNZ to further cut rates on higher inflation prospects.
The New Zealand Dollar has found a strong bid, even though the RBNZ cut rates, as the global hunt for yield continues and the relative yield for New Zealand assets remains the highest in G10.
Rising dairy prices could potentially hint at higher inflation, further limiting the scope of the central bank to cut rates against a backdrop of a housing prices boom. In turn, this might further highlight the appeal of the Kiwi.
Augusts’ ISM Non-Manufacturing Composite survey is on tap as well, set to be released 14:00 GMT.
Expectations are for a slowdown to a 55.0 figure from the prior 55.5.
US news-flow has deteriorated compared to consensus forecast in the last month-and-a-half (according to Citi Economic Surprise Index), potentially implying lower than expected reading in today’s numbers.
A soft result may hurt Fed rate hike speculation, sending the US Dollar lower.
NZD/USD Technical Levels:
Click here for the DailyFX Support Resistance tool
We use volatility measures as a way to better fit our strategy to market conditions. The Kiwi is seeing lower levels of volatility lately according to 20-day ATR measures, like the markets in general this past August.
With that said, if the data today points to Kiwi strength, a break-out above key resistance at the July high might open the floodgates for a pickup in momentum for breakout type plays.
NZD/USD 30-Min Chart (With the GSI Indicator): September 6, 2016
(Click to Enlarge)
The NZD/USD is trading at a potential resistance area below 0.7350, with GSI calculating higher percentages of past movement to the downside in the short term.
The GSI indicator above calculates the distribution of past event outcomes given certain momentum patterns. By matching events in the past, GSI describes how often the price moved in a certain direction.
You can learn more about the GSI here, and download the Trade Station version here.
Other levels of resistance may be 0.7400, 0.7450, and 0.7466. Possible channel trade line resistance currently sits above price action.
Levels of support might be 0.7324, 0.7300 0.7278 and 0.7216.
We generally want to see GSI with the historical patterns significantly shifted in one direction, which alongside a pre-determined bias and other technical tools could provide a solid trading idea that offer a proper way to define risk.
We studied over 43 million real trades and found that traders who successfully define risk were three times more likely to turn a profit.
Read more on the “Traits of Successful Traders” research.
Meanwhile, the DailyFX Speculative Sentiment Index (SSI) is showing that about 27.1% of FXCM’s traders are long the NZD/USD at the time of writing, offering a long bias on a contrarian basis.
You can find more info about the DailyFX SSI indicator here
— Written by Oded Shimoni, Junior Currency Analyst for DailyFX.com
To contact Oded Shimoni, e-mail oshimoni@dailyfx.com
Follow him on Twitter at @OdedShimoni
What’s inside:
- EURUSD broke the ‘neckline’ of a bearish ‘head-and-shoulders’ pattern, April trend-line
- Resistance in vicinity of 11825/80 likely to keep a lid on further strength
- Targeting the low to mid-11600s with more selling
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Coming into last week we pointed out the likelihood of finally seeing a resolution of the range EURUSD had been stuck in for the past few weeks, and one of the outcomes we made note of as a possibility was for the triggering of a ’head-and-shoulders’ pattern. Indeed, we saw a break of the ’neckline’ along with a drop below the April trend-line. This led to decent selling before a minor bounce took shape during the latter part of last week.
Looking ahead to next week the euro is set up for further losses as the path of least resistance has turned lower. Looking to a capper on any further strength there is resistance in the 11825-11880 area (old support becomes new resistance). As long as the euro stays below this area a downward bias will remain firmly intact.
Looking lower towards support eyes will be on the August low at 11662 and the 2016 high of 11616, of which the latter just happens to align almost precisely with the measured move target of the ‘head-and-shoulders’ pattern (determined by subtracting the height of the pattern from the neckline).
Bottom line: Shorts look set to have the upperhand as a fresh month gets underway as long as the euro remains capped by resistance. On weakness, we’ll be watching how the euro responds to a drop into support levels.
For a longer-term outlook on EURUSD, check out the just released Q4 Forecast.
EURUSD: Daily
—Written by Paul Robinson, Market Analyst
You can receive Paul’s analysis directly via email bysigning up here.
You can follow Paul on Twitter at@PaulRobinonFX.
Why and how do we use IG Client Sentiment in trading? See our guide and real-time data.
EURUSD: Retail trader data shows 37.3% of traders are net-long with the ratio of traders short to long at 1.68 to 1. In fact, traders have remained net-short since Apr 18 when EURUSD traded near 1.07831; price has moved 9.6% higher since then. The number of traders net-long is 15.4% lower than yesterday and 16.4% higher from last week, while the number of traders net-short is 0.4% higher than yesterday and 10.5% lower from last week.
We typically take a contrarian view to crowd sentiment, and the fact traders are net-short suggests EURUSD prices may continue to rise. Positioning is more net-short than yesterday but less net-short from last week. The combination of current sentiment and recent changes gives us a further mixed EURUSD trading bias.
— Written by Christopher Vecchio, CFA, Senior Currency Strategist
To contact Christopher Vecchio, e-mail cvecchio@dailyfx.com
Follow him on Twitter at @CVecchioFX
To be added to Christopher’s e-mail distribution list, please fill out this form
Why and how do we use IG Client Sentiment in trading? See our guide and real-time data.
GBPUSD: Retail trader data shows 38.2% of traders are net-long with the ratio of traders short to long at 1.62 to 1. In fact, traders have remained net-short since Sep 05 when GBPUSD traded near 1.29615; price has moved 3.4% higher since then. The number of traders net-long is 0.1% higher than yesterday and 13.4% higher from last week, while the number of traders net-short is 10.6% lower than yesterday and 18.3% lower from last week.
We typically take a contrarian view to crowd sentiment, and the fact traders are net-short suggests GBPUSD prices may continue to rise. Yet traders are less net-short than yesterday and compared with last week. Recent changes in sentiment warn that the current GBPUSD price trend may soon reverse lower despite the fact traders remain net-short.
— Written by Christopher Vecchio, CFA, Senior Currency Strategist
To contact Christopher Vecchio, e-mail cvecchio@dailyfx.com
Follow him on Twitter at @CVecchioFX
To be added to Christopher’s e-mail distribution list, please fill out this form
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