Forex Video Briefing (11/4) – NZD/USD at Consolidation Support


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Forex Video Briefing (11/4) – NZD/USD at Consolidation Support

After the FOMC announced the end of QE last week, the USD gained across the board, and the NZD/USD fell under the duress. It has been consolidating in October, but showed some signs of bearish continuation ahead of the FOMC risk. Then after a vulnerable flag consolidation, the hammer was dropped, and the NZD/USD gave a second bearish continuation signal. Then we had a 3rd bearish continuation signal with a moving average slingshot.

As we started this week, price continued to fall, but at a slower rate. It did crack the previous low on the year at 0.7707, but essentially respected the 0.77 handle as support. Now, we are seeing a rebound. The 0.7770-0.78 area should provide some resistance during the 11/4-11/5 session, if the market is ready to continue marking new lows on the year. However, a break above 0.78 opens up some near-term upside risk. This would suggest the market is not ready for bearish continuation, with the NFP looming.

In this scenario ,we can expect a rally back to the 0.7850-0.79 area, but we should limit any bullish outlook to 0.79. The overall bias still remains bias. The 4H RSI should hold below 60 as well, if the market indeed has a bearish bias ahead of the NFP. That means, if the NFP is in-line with expectations, this is bearish bias will come into play and still pull down the NZD/USD based on the USD-strength.

However, if price pops up above 0.7950 ahead of the NFP, we basically have bearish bias, in which case a NFP that is in-line with expectation might not be enough to keep the USD-strong. In that case, we are looking at a bullish correction attempt in the NZD/USD with pressure towards the 0.8030 October-high.