2016-08-25 12:10:22

Overview and dynamics
NZD/USD pair reacted with restraint to yesterday's publication of data on foreign trade balance in New Zealand.

The trade balance in New Zealand in July was negative (-433 mln New Zealand dollars, -3.03 billion New Zealand dollars y-o-y). At the same time, export dropped, particularly meat products.

NZD/USD pair remains in the ascending channel on the weekly chart and almost reached the key resistance level 0.7380 (EMA200 and the upper limit of the upward channel on the weekly chart).

Strong support is found at the levels 0.7290 (EMA144 on the weekly chart) and 0.7240 (Fibonacci level 38.2% of upward correction to the global downward wave of the pair from the level 0.8800, which began in July 2014, EMA144 on the monthly chart).

Our opinion
If the pair breaks through the level 0.7380, it is likely to further grow to the resistance level 0.7550 (Fibonacci level 50.0%), which would signal the end of a downward correction and return to the global upward trend (on a monthly scale). However, this is only a forecast within technical analysis.

Fundamental factors are the same (different directions of monetary policies of the Fed and RBNZ, subject to its strengthening in the near future) can radically change the technical picture and cancel the further growth of NZD/USD pair.

OsMA and Stochastic indicators on higher timeframes (daily, weekly, monthly) are on the side of buyers.

In the previous review, we wrote that "the level 0.7380 is the key, it will not be easy to pass it. A rebound from the level 0.7380 is possible."

On the 4-hour chart indicators have reversed to short positions. Possible correction to the support levels 0.7240 (Fibonacci level 38.2%), 0.7200 (EMA200 on the 4-hour chart).

Here there is also the lower line of the upward channel on the 4-hour chart. Deeper correction within an uptrend is possible to the support level 0.6975 (EMA200, the lower limit of the rising channel on the daily and weekly charts). But the breakdown of the level 0.6860 (Fibonacci level 23.6%) may cancel the uptrend.

Support levels: 0.7290, 0.7240, 0.7200, 0.7115, 0.7085, 0.7050, 0.6975, 0.6930, 0.6900, 0.6860
Resistance levels: 0.7380, 0.7420, 0.7550

Trading recommendations

Sell Stop 0.7270. Stop-Loss 0.7310. Take-Profit 0.7240, 0.7115, 0.7100, 0.7085, 0.6975, 0.6900, 0.6860
Buy Stop 0.7350. Stop-Loss 0.7280. Take-Profit 0.7380, 0.7420, 0.7500, 0.7550

Key resistance level 0.7380
Key resistance level 0.7380

Support levels 0.7290, 0.7240
Support levels 0.7290, 0.7240