More dovish than the markets expecations
Gov Wheeler and the Reserve Bank of New Zealand were more sanguine about the rate expectations and inflation. They expect the OCR rate to remain at unchanged until September 2019 and that expectations sent the NZDUSD sharply lower.
The price fell from a high of 0.6939 ultimately to a low of 0.6817. In the process, the price fell below a bottom trend line at 0.6833 and traded to a "new" low level going back to June 3rd 2016. However, the low price (at 0.6817), fell short of the 50% retracement of the move up from the August 2015 low at 0.68058 (short by about 12 pips - see daily chart above).
Since that low (about 2 1/2 hours after the statement), the price action has been consolidating in a 46 pips trading range (high at 0.6863). The lowest low in the London/NY sessions reached 0.6827. The NY session high could only get to 0.6859 (a 32 pip range).
What next?
Looking at the 5 minute chart below, the price has remained below the 38.2% of the move down from yesterday's NY session high. That comes in at 0.68679. That keeps the sellers more in control.
The intraday bullish or bearish balance comes from the little time spend below the lower trend line from the daily chart at 0.6833 during the London and NY sessions. Looking at the 5- minute chart, apart from a few tails that eked below that level, the majority of the time has been spent trading above the support line. We are now also above the 100 and 200 bar MAs at 0.6843-44.
So the "what next?" question is shorts still have the nod, but they need to get and stay below those MA lines and the 0.6833 level. Do that, and the bearish engine can be restarted with the 0.6805 the next key target (50%). Get below that level and the bearish door opens even more.
If the price cannot get below those levels, a move above the 38.2% at 0.6868 spoils the sellers party and there is likely to be some buying (so close risk level for shorts).
