NZD Basket - despite lower inflation expectations on Feb 13, the selloff in NZD with short-lived. An analyst from ANZ Bank highlighted scope for further rate hikes. ASB Bank has added fuel to this fire overnight. Money markets are pricing around a 78.4% chance that the RBNZ will keep rates unchanged at next week's meeting. There is a 21.6% probability of a 25-bps hike to 5.75%. From a technical perspective, the single currency basket is building a bearish butterfly formation. This will be completed at 6.7337.
DXY (USD Index) - although we have seen three days of net losses, price action has been kept broadly inside the bullish range from February 13. This highlights the lack of downside momentum. Bespoke support is located at 103.73. I look for limited selling pressure. The FOMC minutes are released on Wednesday the 23rd.
Correlation studies suggest selling into gains for NZD/USD.
NZD/USD - the daily chart highlights the completion of a bullish Elliott Wave count (5 waves) at 0.6370. That would suggest we are in a corrective formation lower. We are building a BAT formation. This will be completed at 0.5840 (target). A common retracement level for the BC leg is 38.2% of the last decline. This Fibonacci retracement is located at 0.6165.
The two-hour chart highlights a complex corrective sequence (5-3-3). A full AB=CD corrective pattern or complete at 0.6164.
Bespoke resistance is located at 0.6151 and 0.6162.
Selling at 0.6162 targeting 0.5845 with a stop loss of 0.6235 offers a risk reward factor of 4.34R. The reason for the high stop loss is that the four-hour chart highlights the completion of a bearish Crab formation at 0.6225.
I am selling NZD/USD at 0.6162
SL: 0.6235
TP1: 0.5845
Risk/Reward Ratio of 4.34R
#tradeplan #NZD/USD
DXY (USD Index) - although we have seen three days of net losses, price action has been kept broadly inside the bullish range from February 13. This highlights the lack of downside momentum. Bespoke support is located at 103.73. I look for limited selling pressure. The FOMC minutes are released on Wednesday the 23rd.
Correlation studies suggest selling into gains for NZD/USD.
NZD/USD - the daily chart highlights the completion of a bullish Elliott Wave count (5 waves) at 0.6370. That would suggest we are in a corrective formation lower. We are building a BAT formation. This will be completed at 0.5840 (target). A common retracement level for the BC leg is 38.2% of the last decline. This Fibonacci retracement is located at 0.6165.
The two-hour chart highlights a complex corrective sequence (5-3-3). A full AB=CD corrective pattern or complete at 0.6164.
Bespoke resistance is located at 0.6151 and 0.6162.
Selling at 0.6162 targeting 0.5845 with a stop loss of 0.6235 offers a risk reward factor of 4.34R. The reason for the high stop loss is that the four-hour chart highlights the completion of a bearish Crab formation at 0.6225.
I am selling NZD/USD at 0.6162
SL: 0.6235
TP1: 0.5845
Risk/Reward Ratio of 4.34R
#tradeplan #NZD/USD