NZDUSD: Kiwi’s recovery potential remains
So NZDUSD will be driven by flows in the next few days with the biggest potential for movement coming on Friday when Federal Open Market Commitee chairman Janet Yellen speaks at Jackson Hole.
Traders will be interested to hear whether she backs up some of the bullish commentary we saw last week from her colleagues, a couple of whom suggested the September 20-21 Fed meeting was “in play” for a rate hike.
Markets are not giving the comments much credence at this stage. In the meantime, the path of least resistance for NZDUSD is up as seen here.
Management and risk description
From an Elliott Wave perspective, I am still interpreting the Kiwi’s advance from its 0.6235 low of last September as a developing “Double Three” corrective structure (refer daily and weekly charts below).
This still gives potential for the Kiwi to extend its recovery toward mathematical resistances about the 0.7500 and 0.7570 levels (see daily chart).
Entry: Kiwi is seen as a buy today at 0.7240/0.7215
Stop: 0.7067, initially
Target: 50% at 0.7460 and 50% at 0.7558
Time horizon: At least a few weeks
NZDUSD daily chart (click to expand)
NZDUSD Weekly chart (click to expand)