Stocks rebound
Consumer confidence was better and the NZDUSD raced higher in celebration of risk on (I guess).
The NZDUSD has been in a funk all month long with the month long range of 220 pips. This is the lowest range for a month since 2007. Last week that range was increased on a move to new month low, but momentum faded and a move higher ensued. Is there time for an extension higher? Why not?
Today, the pair moved lower in Asia-Pacific trading but broke higher in the European session. That move higher took the price above the 100 hour moving average and the 200 hour moving average (blue and green step lines in the chart below). That seemed to be the technical signal to step higher. The pair is now moving above topside channel trend line at 0.6384 (close risk level now).
The high yesterday reached 0.6401. This is the next target to get and stay above.
Above that and the pair will look toward the 0.6413-24. This was swing highs from earlier in the month (Sept 3 and Sept 9).
When the move is based on a "risk on" from stocks, the ride can be tricky. But low liquidity conditions can exasperate moves if there is a correction in the stock market. It can also reverse markets if the stocks do not show any follow through. Overall, the RBNZ is expected to lower rates in October. So there should a limit to any upside madness, but in the meantime (and with liquidity conditions the way they are), the price can do it's thing.
PS... The pair is back below the channel trend line on the 5 minute chart) with the 50% of the last leg higher at 0.6374. This, then the lower channel trend line at 0.6362 are support levels if the buyers are to remain in control from a technical perspective.....
