Short term
/
Sell
Trade view / 06 October 2017 at 0:18 GMT

NZDUSD downside may still have a lot more room to run

Managing Director / Technical Research Limited
New Zealand
Instrument: NZDUSD
Price target: 0.7008
Market price: 0.7112
Background

After NZDUSD traverses today’s US employment report, attention will turn to the announcement of the result of the recent New Zealand election on Saturday; more specifically the results from the special votes for the September 23 election. The election night seats-in-Parliament split is likely to change and influence the process of forming a new government.

Most commentators expect the specials will go in favour of opposition parties, increasing the odds the sitting National Party government will be displaced by a Labour/Greens/NZ First coalition.
 
But before that, the jobs added, unemployment rate and average hourly earnings numbers out of the US take centre stage. A low nonfarm jobs number is being discounted due to last month’s hurricanes. A better than expected number would likely give USD an immediate boost. It would also further lock down the probability of a December rate hike, currently sitting over 80%,
 
Management and risk description

In accordance with my Elliott Wave analysis the Kiwi has sold-off well and now the kiwi displays a possible 3-month head and shoulders classical charting reversal formation (see daily chart below), with a sustained break below Neckline support, currently at .7085, establishing a downside target of 0.6700 over the coming weeks.

This pattern has some notable defects: distorted/unsymmetrical left and right Shoulders and a clear down sloping neckline. Typically, such defects would render this pattern unreliable. However, given the kiwi’s still bearish wave structure, this head & shoulders pattern may nevertheless work out.

Parameters

Entry: Today: Kiwi is seen as a Sell at 0.7115/0.7125 (a move below 0.7085 first would however cancel this).

Stop: just above 0 .7150, initially.

Target: 50% at .7008 and 50% at 0.6716.

Time horizon: allow a few weeks at least for both targets to be met.

Daily NZDUSD chart (click to expand)
NZDUSD daily chart

















Source: ThomsonReuters 

Weekly NZDUSD chart (click to expand)


















Source: ThomsonReuters  

For more on forex, click here.

— Edited by Robert Ryan

Non-independent investment research disclaimer applies. Read more
A compiled overview of Trade Views provided on TradingFloor.com is found here
06 October
Treve Treve
thanks Max very interesting!
06 October
marran marran
any thoughts on the audnzd max?
06 October
Max McKegg Max McKegg
Upside potential
06 October
Gbpaud Gbpaud
Great!!
07 October
Morris Morris
Was the wave count on Weekly chart a bit tricky?
07 October
Max McKegg Max McKegg
If the Wave Count is unclear then best left out
09 October
Morris Morris
ok!
10 October
Gbpaud Gbpaud
Hi max,can I enter the trade now?
12 October
marran marran
any thoughts on this pair at the moment max?
12 October
Max McKegg Max McKegg
Recovery growing legs

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