The FOMC is not the only central bank in play today. At 4 PM ET, the Reserve Bank of New Zealand is expected to keep rates unchanged. Eamonn Sheridan has a preview for review at “Preview – Reserve Bank of New Zealand policy announcement due at 2000GMT“. I strongly suggest reading his post.
What are the technical levels to eye for the NZDUSD?
The NZDUSD held the 200 hour MA and 50% today. A move below is needed to turn the bias back lower.
In my video report (done at the end of the trading day yesterday – CLICK HERE . The NZDUSD analysis starts at 5:55 in the video), I speak about the 200 hour MA and 50% of the move down last week at the 0.7911-13 area, as being a key technical level that needs to be broken if the bias is to move to the downside.
In trading today, the price was not able to close below that key support level (the price traded below on one hourly bar but that was quickly rejected). The dollar selling seen in NY trading today, has pushed the price higher away from the level.
What we know from the support holding is that the 0.7911-13 will be eyed by traders through the decision and going forward. A move below is more bearish for the pair. Look for sellers to take control.
Until then, the bulls remain in control (i.e., the intermediate term bias is bullish).
On the topside, off the hourly chart, the pair made new month highs on October 21st at 0.80327. That high took out the prior high at around the 0.8000 level. After peaking at 0.80327 on October 21, the price fell sharply lower in volatile trading.
ON October 22nd – the day after the high was made – the corrective high could only get up to 0.7989. This says to me there was a reluctance to move above the 0.8000 level.
I will be gauging buying sentiment at that 0.8000 level on any rally to see if the sellers line up once again. Stay below and traders can look to use the level to lean against with a rotation back toward the 200 hour MA. A move above and stops will likely be triggered with a test of the 0.80327 as the next target.
Looking at the daily chart below the another level to eye above comes in at the 0.8051 where topside channel resistance if found. At the high, the price briefly moved above this trend line but that move quickly failed.
Risk is of course increased not only from the FOMC but from what the RBNZ says. I personally, will sit it out until the comments are made and the market decides the directional bias. The bias going in is bullish, but I fear the RBNZ might not be so bullish in the comments. So wait and see time.
NZDUSD has resistance at 0.8032 and 0.8051 trend line.
but event risk is elevated (for me I don’t have a desire to be long into the announcement even though the bias is bullish).