Analys från DailyFX
NZD/USD Levels to Know Ahead of US August CPI Data
Talking Points:
– NZD/USD held a key support area following the US Dollar rally, currently at resistance
– US CPI data the main event risk on the docket, could set the stage for FOMC
– Another dip in stocks might weigh on the Kiwi
The NZD/USD is trading around resistance at the July high, after the pair held a key support area following the recent US Dollar strength.
The US August inflation data is in focus for the hours ahead as we rapidly approach the FOMC rate decision next week.
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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US August Consumer Price Index data is set to hit the wires 12:30 GMT.
Expectations are for the headline year-on-year number to rise for a 1.0% print, while the Core figure is forecasted to hold steady at 2.2%.
US economic data has underperformed relative to consensus estimates in recent months, weighing on Fed imminent rate hike bets. Another miss seems likely to see the US Dollar trade lower, as inflation still seems to be the missing piece for the Fed’s dual mandate.
With that said, risks may be slightly skewed to the upside for US Dollar, as a reading in line with expectations, or a slight miss might see limited follow-through as the market looks ahead for a potential hawkish hold by the Fed, which could see the US Dollar find support relatively soon.
The preliminary reading of the University of Michigan Consumer Confidence is on tap as well, with an expected figure of 90.6 versus a prior 89.8 reading. The inflation expectations number from the survey could be in focus here as well due to the aforementioned considerations.
Another theme to have in mind when trading the pair is the potentially unfolding situation in equities and global bonds selling off. Presumably, bonds are being sold on speculation about potential changes in global monetary policy, with the ECB and BOJ in focus. If stocks stay under pressure, this seems likely to weigh on the sentiment linked Kiwi.
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’s realized volatility is still subdued based on 20-day ATR readings.
In turn, this may imply that the more “macro” levels could hold until next week, but caution is warranted on significant deviations to data, or further momentum from the themes highlighted above.
NZD/USD 30-Min Chart (With the GSI Indicator): September 16, 2016
(Click to Enlarge)
The NZD/USD bounced off support at 0.7300, with GSI calculating higher percentages of past movement to the downside in the short term from current levels.
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 support levels to watch in the short term might be 0.7278, 0.7250, 0.7200 and 0.7170.
Levels of resistance may be 0.7326, 0.7350 and 0.7400.
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 41.8% of FXCM’s traders are long the NZD/USD at the time of writing, after rapidly reducing shorts on the drop (perhaps too quickly- see the “Traits of Successful Traders” research).
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
Confidence is essential to successful trading, see this new guide – ’Building Confidence in Trading’.
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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