New Zealand dollar hotspots
NZD / USD seems to be trading in the formation of the ox flag, following the September opening interval and the New Zealand update Gross Domestic Product (GDP) the report may trigger a bullish reaction New Zealand Dollar the economy is expected at a record pace.
The formation of the NZD / USD bull flag occurs in the event of failure of the monthly high test
NZD /USD trades in a narrow range failed attempt to test monthly record (0.7170), and the exchange rate may consolidate for the rest of the week as it returns the prepayment after a larger-than-expected slowdown US Consumer Price Index (CPI).
It remains to be seen whether the New Zealand GDP report will affect the short-term outlook for NZD / USD, as growth is expected to be 16.3% in the second quarter of 2021, the highest since the start of the series in 1987, but signs of a strong recovery may put pressure on New Zealand. -The Reserve Bank of Zealand (RBNZ) to normalize monetary policy sooner rather than later. Assistant to the Governor Christian Hawkesby revealed that the “50 basis point move was definitely on the table” at the August meeting.
As a result, a positive GDP report may encourage speculation about imminent changes in RBNZ policy there are only two meetings left until the end of the year, but additional recognition in NZD / USD can be fed tilt in the retail mood as at the beginning of this year.
The IG customer feelings report shows 35.19% of traders are now net length NZD / USD, where the trader relationship is short and long standing 1.84 to 1.
The number of traders in net length is 1.77% lower than yesterday and 19.31% higher than last week, while the number of traders is short-5.19% lower than yesterday and 8.08% lower than last week. The increase in the net long position is due to the fact that NZD / USD trades in the monthly opening period in September, while the decline in short net interest rates has done little to alleviate crowding-out behavior, as 36.38% of traders were paired last week.
With this in mind, the update of the New Zealand GDP report could affect the short-term outlook for NZD / USD as the RBNZ prepares to shift gears and the exchange rate may take shape at the end of the month with a larger recovery in the form of a bull flag.
Daily schedule of NZD / USD exchange rate
Source: Trading View
- Keep in mind that the head and shoulders arose in the first quarter of 2021 as NZD / USD fell below the 50-day SMA (0.7002) for the first time since November, exchange rate downwards 200-day SMA (0.7115) for the first time since June 2020 to a new low of 0.6805 in August.
- However, NZD / USD has reversed its pre-November 2020 low (0.6589) due to a failed attempt to close below 0.6810 (38.2% expansion), and remains to be seen whether from the lowest rise in August (0.6805) turns out to be a correction in a broader trend as the formation of the ox flag develops.
- The NZD / USD, in turn, may continue to protect the September opening range as it remains higher Fibonacci overlap from about 0.7070 (61.8% expansion) to 0.7110 (38.2% expansion), but the highest monthly break (0.7170) can be opened 0.7260 (78.6% expansion) when there is a continuation pattern in the game.
- A break above the highest level in June (0.7288) leads to 0.7330 (38.2% retracement) to 0.7350 (23.6% expansion) radar area, with the next area of interest being approximately 0.7500 (100% extension) of the handle.
- However, failure to keep over Fibonacci overlap from about 0.7070 (61.8% expansion) to 0.7110 (38.2% expansion) may NZD / USD backward direction 0.6990 (23.6% retracement) range, with the next area of interest being around 0.6940 (50% expansion) to 0.6960 (38.2% retracement).
– Written by David Song, currency strategist
Follow me on Twitter at @DavidJSong