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NZD/USD Trading - New Zealand Retail Sales - 21 Nov 2016

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NZD/USD Trading chart 21 Nov 2016
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New Zealand retail sales in Q3 rises 0.9%

The New Zealand dollar is looking bullish today after the third quarter retail sales numbers were released ahead of time. According to the leaked data, it is estimated that retail sales in New Zealand rose 0.9% in sales volume. The Q3 retail sales matched market estimates of 0.9%, but it was slower than the 2.2% increase seen in Q3 2016. Still, it leaves the annual retail sales at to 5.3%.

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The New Zealand dollar fell to a 2-month low and fell for 9 consecutive days, losing over 5.13% as a result.

The declines in NZDUSD came as the US dollar trimmed initial losses to rise strongly after the election results, supported by fiscal spending talks from the new Trump administration and strong expectations of another Fed rate hike in December.

NZDUSD's long term trend is bearish after price action completed the head and shoulders pattern on the daily chart. The current rebound we see near 0.7046 - 0.6982 marks the test of the neckline support and therefore the bounce off this current level is expected.

In the near term, the gains are likely to be limited as prices could be seen retracing to as much as 0.7243 which marks the 61.8% retracement level of the current declines.

How to trade binary

While we expect to see a reversal in the near term, traders should be warned that there is an equal risk of price turning bearish again.

Therefore, ideally a daily close with a doji pattern would be a perfect set up to buy CALL options. While we do not know how the daily bar will close, short term intraday support is identified at 0.7023 - 0.7005. Therefore, buy CALL options in NZDUSD for 2100 GMT expiry only on a close above this support level.

The Stochastics on the 60-minute chart has moved significantly from the oversold levels, but wait for another buy signal, preferably above or at 0.7023 - 0.7005 for a valid CALL option signal.

Asset: NZD/USD
Direction: Call
Target level: 0.7023
Expiry: 21:00 GMT

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