NZDUSD stalls above support, but further gains doubtful
The New Zealand dollar rallied to a fresh 2-month high on Friday, briefly touching 0.7338. Friday's price action in NZDUSD resulted in a hanging man candlestick pattern which comes at the top end of the rally and signals a near term exhaustion to this uptrend. Unless price closes above Friday’s high of 0.7338, we cannot expect to see further upside in NZDUSD.
The New Zealand dollar gapped lower on today's open with the US election rumors being the key market driver. Even the fundamentals were ignored.
Earlier today in the Asian session, Statistics New Zealand announced a revision to the September quarter's inflation data. CPI for Q3 was revised to 0.3% from the previously reported 0.2%, pushing New Zealand's annual inflation rate to 0.4%, from 0.2%.
Despite the bullish fundamentals, the Kiwi dollar failed to evoke much of a reaction as the US dollar is seen to be trading stronger. Over the weekend, the FBI announced that there was no new evidence in the email scandal that has engulfed Hillary Clinton. The news sent the dollar higher and is likely to see the Democratic candidate gain a few points in lead over the Republican candidate Donald Trump.
On the daily chart, NZDUSD closed Friday's session with a hanging man candlestick pattern, which comes after three days of strong gains. Friday's price action registered a high and low of 0.7338 and 0.7299. A break above or below this range will signal further downside in NZDUSD.
How to trade binary
On the 1-hour chart, we see price currently bouncing off the support level established at 0.7288 - 0.7300. A bounce off this support could see price consolidating within Friday's range, but further upside remains doubtful.
On the hourly chart, look for NZDUSD to break down below 0.7288 - 0.7300 support and purchase PUT options for 21:00 GMT expiry. Keep an eye out on the Stochastics oscillator as well which is currently oversold and supports the short term bounce above 0.7288 – 0.7300.
A break below the support could see NZDUSD extend its declines towards the next main support at 0.7190 - 0.7180, supporting the view for PUT option in NZDUSD.
Expiry time: 21:00 GMT