NZD/USD LT view

Afternoon guys,

Hope you all enjoyed the Christmas break and are ready for another year of thrashing the markets.

NZD/USD is currently looking extremely bearish for the following reasons:

- Break of the neckline of the H&S, implying downside movement to 0.66150;
- Break of the trend line support from Jan to June lows;
- Break of the 200dma.

MACD and recent price action suggest that a pullback is imminent. I suggest shorting this pair at 0.70047 (.382 retracement of 14-22nd Dec move) and adding further damage if we see a retest of the trend line support.

This is a technical play at heart, although various fundamental factors including broad US$ strength during 2017 (see related idea), the commodity bloc currencies' position of vulnerability to worsening yield differentials vis a vis the USD and the propensity for loss of ground if the risk environment begins to deteriorate favour n/u shorts.

Comment:

Looking constructive :)

Comment:

Perfect entry :)

Comment:

Struggling at the .382 retracement, volatility trends suggest that a substantial USD move is on the horizon and given recent /dx price action and market positioning (heavily net long USD), I would expect this to be to the downside. I am more inclined to advise that you play it safe and close out at a small profit here and await a test of the trend line as suggested. AUDUSD price action (a fellow antipode w/ a similar fundamental story) has convincingly broken above an important resistance line, signalling further upwards movement. I therefore expect NZDUSD to follow suit in the near term.