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NZDUSD Below Ichimoku – Fails to Break Fibonacci Resistance


Nov.30.2016

NZDUSD Below Ichimoku

While Invest Diva groupies enjoyed earning some pips on short-term NZDUSD gains on Tuesday, the bulls weren't able to change the fate of NZDUSD below Ichimoku. With all the OPEC craze and emotional markets, let's take an IDDA approach to develop a trading strategy for Mr. Kiwi as he dances against Ms. USA on the forex dance floor.

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Technical Analysis | NZDUSD Below Ichimoku

Daily Chart: After continuous gains for almost a year, NZDUSD broke below the Ichimoku cloud in October and confirmed the break in November. With the cloud turning down, the pair seems to now be stuck between the 23% and 38%  Fibonacci retracement levels at 0.7177 and 0.70 respectively. These two levels are now considered as the new pivot zone in medium-term. 

 

[caption id="attachment_13696" align="alignnone" width="1516"]NZDUSD Below Ichimoku - Daily Chart Technical Analysis NZDUSD Below Ichimoku - Daily Chart Technical Analysis[/caption]

A break below 0.70 would open doors for further drops towards 0.6850, which is the 50% Fibonacci level.

 

Monthly Chart:  The pair remains below the thick Ichimoku cloud with the prevailing cloud turning down. The monthly candles formed a bearish engulfing in October and the December candlestick opened on a bearish note on Thursday's Sydney session. If this sentiment continues, the one-year-long uptrend could turn out to be a mere correction in the course of the ultra long-term saucer-top cycle which started back in 2009.

[caption id="attachment_13697" align="alignnone" width="1305"]NZDUSD Below Ichimoku - Monthly Chart Technical Analysis NZDUSD Below Ichimoku - Monthly Chart Technical Analysis[/caption]

Fundamentals | NZDUSD Below Ichimoku

Wednesday was a crazy day for oil as Brent crude oil skyrocketed by 7.40% to $50.82 per barrel after Saudi Arabia shocked the skeptics with an OPEC deal to Cut Oil Production. The news also positively impacted the US dollar.

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And as if the OPEC surprise wasn't enough, the US data also took a positive turn. The ADP non-farm employment change came out  stronger than the expected 161K, with a whopping 216K increase. Personal income and Chicago PMI also came in better than expected.

The only downsides were personal spending and pending home sales, which missed the mark.

New Zealand Side: Meanwhile in the Middle Earth, there was a 7.8 magnitude quake which shook the Kiwis to the core and caused a ton of damage to buildings and infrastructures. On Wednesday, RBNZ Governor Wheeler noted that the Kiwis are in for a 'tough ride' due to growing global protectionism.

There are rumors circling around that the New Zealand economy may not be in good enough shape to withstand recent earthquakes and changes in the global political situation.

New Zealand Institute of Economic Research (NZIER) says that the recent events have introduced more than the usual uncertainty into the economic outlook. So as you may be guessing, Mr. Kiwi is not really having a good end-of-the-year party.

 

Coming up on the economic calendar...

On the economic calendar on Thursday US Initial Jobless Claims (NOV 26) will be out at 1:30 PM GMT followed by their ISM Manufacturing (NOV) at 3 PM. US Unemployment Rate and Change in Non-farm Payrolls (NOV) will be out on Friday at 1:30 PM GMT and a positive outcome on all these could support our bearish outlook on the NZD/USD pair. NZD Value of All Buildings will be out during the next day’s Asian session which could also impact the pair.

 

Market Sentiment |EURGBP Consolidating Below Ichimoku

52% of traders on one of the largest brokers in the US were long the pair on Wednesday. We normally want to go against the crowd and would use this as a contrarian indicator to price action. So the fact that the majority of traders are long gives signal that the NZDUSD may continue lower.

However from a longer-term standpoint, the trading crowd has been unchanged since last week. The combination of current sentiment and recent changes gives a further mixed market sentiment bias.

 

Trading Strategy | EURGBP Consolidating Below Ichimoku

Putting the technical, fundamental and sentimental points of the IDDA approach together, we could consider going for a medium to long-term position in the NZD/USD pair. Please visit out Premium Facebook Group for detailed strategy.

As always, when in doubt, book a private session with me to get your portfolio on track.

 

Here are Invest Diva's calculations for important EUR/GBP approximate levels to keep an eye on:

Support Levels Turning Point Resistance Levels
0.67 0.70 0.7294
0.6850 0.7177 0.75

 

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Kiana 喜愛成
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