Forex Flash: NZD/USD looks bearish ahead – Westpac
FXstreet.com (Barcelona) - Imre Speizer of the Westpac Global Strategy Group believes that NZDUSD looks set to weaken during the next few days from the current 0.8232 towards 0.8050.
He cites the looming RBA meeting on December 4th as increasing weighing on AUDUSD with much talk of an impending rate cut and is having a negative effect on NZDUSD. Additionally, the note that the short term technical outlook is bearish too.
He writes, "On 14 September, a multi-month up trend ended and a corrective phase started. This has taken the form of a descending channel, the oscillations within reaching the channel's upper and lower boundaries three times (first chart). Until this range breaks, we are inclined to trade it tactically, i.e. buy at the lower boundary and sell at the upper." He notes that the upper boundary at 0.8280 was almost reached last night and he now favours a decline
towards (but not necessarily reaching) the lower boundary at 0.8050. This view would be discarded upon any upward break of the range which would have bullish implications.
Looking at hourly charts and applying Elliot Wave methodology reveals five waves upwards since the 16th November that are nearly complete and a three wave correction should ensue. The Fibonacci target for this correction, which started last night, is the 0.8135-0.8185 area. He adds, "Note too the potentially bearish head and shoulders pattern which would be triggered upon a break below the neckline at 0.8220 and worth a cent in magnitude."
He finishes by noting that this technical view is supported by the in house probability model which is used in a contrarian manner. The model described the extent to which recent movement s in interest rates, commodity prices and risk sentiment are priced into NZDUSD. Extreme model readings have usually been a good guide to reversals in the currency. Currently the model reading is extremely elevated, implying little prospect of further upside in the model, and therefore NZDUSD, near term.
He cites the looming RBA meeting on December 4th as increasing weighing on AUDUSD with much talk of an impending rate cut and is having a negative effect on NZDUSD. Additionally, the note that the short term technical outlook is bearish too.
He writes, "On 14 September, a multi-month up trend ended and a corrective phase started. This has taken the form of a descending channel, the oscillations within reaching the channel's upper and lower boundaries three times (first chart). Until this range breaks, we are inclined to trade it tactically, i.e. buy at the lower boundary and sell at the upper." He notes that the upper boundary at 0.8280 was almost reached last night and he now favours a decline
towards (but not necessarily reaching) the lower boundary at 0.8050. This view would be discarded upon any upward break of the range which would have bullish implications.
Looking at hourly charts and applying Elliot Wave methodology reveals five waves upwards since the 16th November that are nearly complete and a three wave correction should ensue. The Fibonacci target for this correction, which started last night, is the 0.8135-0.8185 area. He adds, "Note too the potentially bearish head and shoulders pattern which would be triggered upon a break below the neckline at 0.8220 and worth a cent in magnitude."
He finishes by noting that this technical view is supported by the in house probability model which is used in a contrarian manner. The model described the extent to which recent movement s in interest rates, commodity prices and risk sentiment are priced into NZDUSD. Extreme model readings have usually been a good guide to reversals in the currency. Currently the model reading is extremely elevated, implying little prospect of further upside in the model, and therefore NZDUSD, near term.
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