NZDUSD Bearish Engulfing Formation on Monthly Chart
NZDUSD Bearish Engulfing
It's mid-October and NZDUSD bearish engulfing formation is confirmed on the monthly chart, as the pair continues below the Ichimoku cloud. With US elections getting closer and a bunch of New Zealand economic data on tap, what could be the best trading strategy?
Technical Analysis - NZDUSD Bearish Engulfing
A lot happened on the NZD/USD Forex dance floor this month. First and foremost, and as Invest Diva insiders already know, the pair changed direction. On the monthly chart, the pair was held by the 50% Fibonacci level; the most gutsy Fibo level of them all. After forming a hammer candlestick pattern, the pair went on to form a bearish engulfing. Not only that, it also tested below the upward channel the pair was dancing within... while breaking below the 38% Fibonacci level.
All of this happend below the Ichimoku cloud as the monthly forecast cloud turns red.
NZDUSD Bearish Engulfing Formation on Monthly Chart - Technical Analysis
Meanwhile on the daily chart, the pair has recently broken below the Ichimoku cloud... Completed a correction... and now is back with the bearish sentiment as it dances below the pivot level of 0.7230 towards support of 0.6850.
NZDUSD Bearish Engulfing Daily Chart - Technical Analysis
The US dollar ended last week on a very strong note as Fed’s Dudley said he would expect this year’ for next rate hike.On the news, US dollar crosses such as EUR/USD and NZD/USD plummeted down to a previous lows.
On the economic calendar today we have the US Industrial Production which measures changes in the volume of output produced by the manufacturing, mining, and utility sectors at 1:15 PM GMT.
During the next day’s Sydney session RBA Governor Lowe is due to Speak in Sydney at 9:10 PM GMT.
New Zealand will release their Consumer Prices Index for Q3 at 9:45 PM GMT.
US Economy: So far the US has printed mostly better than expected numbers in the month of October. The elections play a massive role in the US dollar strength this month. As long as the polls are in favor of a Hillary Clinton victory in November, we could expect the US dollar to continue its road of strength.
New Zealand Economy: As the Kiwis head into Spring, we could expect growth in agricultur and retail sales. Monday night's PMI is the first all-important economic event of the month for New Zealand and it is highly anticipated. Consumer Price Index is expected to have lowered from Q2, from 0.4% to 0.1%. Since the expectations are already quiet low, a worse than expected outcome could weigh on Mr. Kiwi.
Trading Strategy - NZDUSD Bearish Engulfing
Bearish Scenario: If you have been following my signals and have high risk tolerance, you probably are already in a bearish NZD/USD trade targeting either 0.70 or 0.6850 depending on your risk tolerance.
If not, it's not too late! Wait for the Kiwi PMI results and develop your strategy accordingly.
Bullish Scenario: At this point a medium-term bullish scenario requires a break above the Ichimoku cloud and the pivot of 0.7230
Here are Invest Diva's calculations for important NZD/USD approximate levels to keep an eye on from a long-term perspective:
|Support Levels||Turning Point||Resistance Levels|