JPMorgan, Wells Fargo, and Citi are all set to release earnings prior to the New York bell with Saxo Bank head of equity strategy Peter Garnry bullish on trading income, commercial banking, and – Trump permitting, of course – stock markets in general.
Short term
Trade view / 27 July 2016 at 3:42 GMT

NZDUSD shows significant downside risk

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

NZDUSD is weaker in afternoon trading, following the Aussie dollar down after Australia’s June quarter inflation numbers were released. See here: Australia's inflation beats forecasts but rate cut still likely.

Analysts are still combing over the figures – the Reserve Bank of Australia bases its monetary policy on a range of inflation measurements – but the conclusion seems to be that the path is clear for a rate cut on August 2. If that happens, the Reserve Bank of New Zealand will definitely also cut on August 11, and perhaps by 50 basis points, in a desperate attempt to dislodge the kiwi dollar from its 0.70 perch. 
Before all that we have a post-meeting statement from the Federal Reserve to digest. However, markets expect a bland commentary giving little away on rate hike intentions.

Management and risk description

From an Elliott Wave perspective it is tenable to interpret a completed “Irregular” corrective structure from the kiwi’s 0.6245 low of last September, with a medium-term selloff toward at least the 0.6660 level underway (refer Daily Chart 1/ below).
From a classical charting stand point, I am monitoring a potential seven-week Head and Shoulders reversal formation (see Daily Chart 2/ below) where a sustained break below Neckline support (currently situated at 0.6950) will establish a downside objective of 0.6580.  


Entry: a break below 0.6950 can be sold.

Stop: 0.7001, initially.

Target: 50% at 0.6675 and 50% at 0.6590.

Time horizon: at least a few weeks.

NZDUSD Daily Chart 1 (click to expand)
NZDUSD daily chart
 Source: ThomsonReuters  

NZDUSD Daily Chart 2 (click to expand)
NZDUSD daily chart
 Source: ThomsonReuters  

NZDUSD Weekly chart (click to expand)
NZDUSD Weekly Chart

Source: ThomsonReuters. Create your own charts with SaxoTrader; click here to learn more 

– Edited by Gayle Bryant

For more on forex click here

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