Talking Points
NZDUSD August opening range takes shape above technical support
Possible key inflection range 8440/50
Limited event risk on tap this week
NZDUSD Daily Chart
Chart Created Using FXCM Marketscope 2.0
Technical Outlook
NZDUSD testing critical support ranges 8440/50 & 83985-8416 – bullish invalidation
Break targets support objectives at 8350/60, 8259, 8213/24
Outside day reversal at the lows may suggest near-term exhaustion- reversal risk
Key resistance 8532/35- bearish invalidation
Break targets 8567, 8600, 8650
Daily RSI holding June lows- possible exhaustion
Event Risk Ahead: New Zealand Employment data tonight and US Trade Balance tomorrow
NZDUSD 30min Chart
Notes: Back on July 14th we warned of possible exhaustion on the long-side of NZDUSD as the pair approached the 2011 highs around 8840. The subsequent turnover went well beyond all our support objectives and the kiwi now finds itself approaching key support to open August trade. The 8440/50 region is defined by multiple Fibonacci relationships as well as the 200-day moving average and will converge on trendline support dating back to the August 2013 low for the next few days. With the daily momentum signature holding the June lows the risk for a reversal higher builds while above this threshold.
Bottom line: looking for signs of exhaustion with a preference to buy dips near-term while above 8440. A break below this level puts us neutral with a move surpassing 8400 keeping the medium-term focus weighted to the downside heading into August trade. Look for a move surpassing the weekly opening range high / key resistanceat 8532/36 to add conviction on long-side exposure with such a scenario suggesting a more significant low may have been put in this week.
The average true range has remained rather tight here so we’ll up the profit targets to 38.2% of the daily ATR- this puts us at about 21pips per scalp. Note that caution is warranted heading into tonight’s data with the event likely to fuel added volatility on kiwi crosses. Follow the progress of this trade setup and more throughout the trading week with DailyFX on Demand.
* It’s extremely important to give added consideration regarding the timing of intra-day scalps with the opening ranges on a session & hourly basis offering further clarity on intra-day biases.
Key Threshold Grid
Entry/Exit Targets
Timeframe
Level
Technical Relevance
Resistance Target 1
30min
8495
Sunday Low / Pivot
Bearish Invalidation
Daily / 30min
8530/36
Weekly ORH / 100% Ext / 38.2% Retrace
Break Target 1
Daily / 30min
8565/67
61.8% Retracement / Soft Resistance
Break Target 2
Daily / 30min
8600/03
61.8% Extension / Monthly Pivot
Break Target 3
Daily / 30min
8622/25
100DMA / 50% Extension
Break Target 4
30min
8647/50
38.2% Ext / 23.6% Retracement
Break Target 5
Daily / 30min
8718/32
7/21 High / R1 Monthly
Bullish Invalidation
Daily / 30min
8440/50
200DMA / 88.6% & 50% Retrace(s) / TL Support
Break Target 1
Daily / 30min
8395/16
June Low & Close Low / 1.618% Ext / 38.2% Retrace
Break Target 2
Daily / 30min
8351/60
61.8% Retracement / S1 Pivot / April 2013 Low
Break Target 3
Daily
8259
50% Retracement
Break Target 4
Daily
8213/24
2008 High / S2 Pivot
Average True Range
Daily (20)
55
Profit Targets 20-22pips
*ORH: Opening Range High
*ORL: Opening Range Low
Other Setups in Play:
EURUSD Risks Correction Into August Open- 1.3372 Key Ahead of ECB
USDOLLAR Vulnerable Heading Into NFPs- August Setups in Focus
EURAUD Risks Near-Term Reversal Heading Into H&S Target, Key Support
AUDNZD Rally At Risk Ahead of RBNZ- 1.0880 Key Resistance
NZDCAD Testing Range Support Ahead of RBNZ- 9295 Key
GBPJPY Eyes Major Inflection Zone- Weekly Opening Range in Focus
NZDJPY Reversal Underway- Scalps Target Key Support at 88.20
GBPUSD Posts Outside Reversal Off Key Support- Bullish Above 1.7065
—Written by Michael Boutros, Currency Strategist with DailyFX
For updates on this scalp and more setups follow him on Twitter @MBForex
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Source: Daily fx