NZDUSD at Key Support and August Range Low- Exhaustion or Break?
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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 |
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
To contact Michael email [email protected] or Click Here to be added to his email distribution list
Join Michael for Live Scalping Webinars this week Tuesday – Thursday on DailyFX Plus (Exclusive of Live Clients) at 15:30 GMT (11:30ET)
Interested in learning about Fibonacci? Watch this Video
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