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NZDUSD Tests Triple Bottom Neckline Below Ichimoku

By 12/12/2017 No Comments

NZDUSD Update:  The NZD/USD pair tested the neckline of a Triple Bottom chart pattern on Wednesday ahead of the FOMC rate decision. Let’s take a look at 3 key points of IDDA technique for our NZDUSD update.

1- NZDUSD Technical Analysis

The NZD/USD pair has been marching up on Kiwi strength, even though the USD or the quote currency is also strengthening on FOMC rate hike speculations later today. The pair is being strongly supported by the 0.6842 level.

During Wednesday’s Asian session it made it towards the neckline of a Triple Bottom chart pattern and the 23% Fibonacci retracement level of 0.6959.

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However, a thick bearish Ichimoku cloud on the daily chart is preventing it from going up higher.

NZDUSD Update - Triple Bottom Below Ichimoku Cloud

NZDUSD Update – Triple Bottom Below Ichimoku Cloud

 

This is a familiar scene for NZD/USD, as the same pattern appeared before the massive uptrends back in May 2017. Back then, the pair was also under a thick bearish Ichimoku cloud but was able to break through it. We obviously know that past performance is not indicative of future patterns 🙂 But this is an interesting observation for today’s NZDUSD update.

 

 

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This brings us to the second point of the IDDA; Fundamental analysis.

2- NZDUSD Fundamental Analysis

We have a lot on the economic calendar today. However, the main event of the day remains the FOMC rate statement at 7 PM GMT.

Analysts are pretty sure that the Fed will raise the rates by 0.25%. While the markets have already priced a potential rate hike in the USD crosses, this doesn’t mean that the Fed won’t come up with a brand new surprise to catch the markets off-guard.

Potential Changes Include…

We could see changes in economic projection and changes in member’s future bias.

What’s Going on in the US Politics?

Besides this, we are also expecting political tensions in the US as the entire country is watching as Alabama chooses whether to elect an alleged child molester or a Democrat.

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Nine women have come forward to accuse former Alabama Chief Justice Roy Moore of sexual misconduct. Several of them say they were teens at the time. One woman says she was 14 years old when Moore molested her. He denies the accusations.

If the Democratic candidate, Doug Jones wins in Alabama, the USD could drop in fears of tax reform not getting passed by the Republicans.

Anything else?

Of course, we also have Trump who will be giving a speech on Wednesday to communicate his plans to overhaul the nation’s tax code.

 

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More on the Economic Calendar

We have so much more on the economic calendar today, including the UK jobs report at 9:30 AM GMT, followed by Euro-Zone Employment (YoY) (3Q) at 10 AM. The US Consumer Price Index (YoY) (NOV) will be next at 1:30 PM.

 

3- NZDUSD Market Sentiment Analysis

The third point of IDDA looks at market sentiment. On Tuesday, retail trader data showed 60.9% of traders are net-long the NZD/USD. The number of traders net-long is 9.4% higher than yesterday and 3.0% higher from last week, while the number of traders net-short is 5.5% higher than yesterday and 21.8% higher from last week.

However, positioning is more net-long than yesterday but less net-long from last week.

We typically take a contrarian view to crowd sentiment. The combination of current sentiment and recent changes gives us a further mixed NZDUSD trading bias.

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Final Thoughts on NZDUSD Update …

As the 4th point of the IDDA technique, you must calculate your risk tolerance before deciding on the investment strategy that is suitable for your portfolio.

We currently have mixed signals from all three analytical points of the IDDA for today’s NZDUSD update. It could be a good idea to keep an eye on the pair after this week’s event risks to see if the pair is able to break above the Triple Bottom neckline or the Ichimoku cloud.

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