I noted the bullish wedge breakout for the Kiwi last week and this momentum seems to be holding to start the week. Strong NZD retails sales data and a bit of USD weakness today are combining to help support this bias.
Kiwi daily: well it certainly looks like the ‘bullish wedge’ breakout is trumping the potential ‘Bear Flag’ for the time being. I was stopped out of my long trade here late last week and I’ve been considering if and where it might be safe to get back in. The gap up today will trigger a new TC signal but this won’t be valid. Also, strong resistance lies ahead at the 0.80 region which is only about 60 pips away so the risk/reward just now isn’t great. Also, many traders will be looking to short this pair if it gets up to 0.80 and the RBNZ might start flexing their jawbone muscles again too!
I’ve added fibs to the daily chart for the recent bear move and this shows the 61.8% retrace level up near the previous support of the monthly tend line. This is up near the 0.84 region. Thus, if the Kiwi was to some how keep going and break and hold above the 0.80 then I would consider a technical trade up to this 0.84 region.
Kiwi daily Cloud: the Kiwi is trading above the 4hr Cloud but is currently entering into the daily Cloud and so price action could be quite choppy. The top of the daily Cloud is at about 0.81 and so some traders might prefer to wait to see the Kiwi emerge from the daily Cloud before taking any long. This would still offer a possible 300 pip potential until the 0.84 region.
Summary: watch for any close and hold above the 0.80 level or above the top of the daily Cloud near 0.81 for a possible long trade on the Kiwi with the 0.84 region being a potential target.
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