Hello Forex Traders,
Today’s focus will center on both the NZ Dollar currency pairs and US Dollar crosses.
NZD RATE HIKE
Yesterday the Reserve Bank of New Zealand (RBNZ) increased interest rates from 2.5% to 2.75%. The rate hike accelerated the uptrend on the New Zealand’s currency and the NZDUSD rose 1 cent and broke above 0.85 in the process.
As mentioned in Tuesday’s article, a breakout scenario would have a sizeable wide open space to the next resistance level. Yesterday’s Double Trend Trap video explained potential entries and trade management methods to capitalize on that space. The trade is currently up about 80 pips. Also other pairs such as the NZDJPY and NZDCAD have already moved substantial distance away from the DTT entry levels.
As expected, the USD also significantly weakened against the Euro yesterday. The break of the resistance trend line marked the start of an upside swing which has already received early follow through in the Asia session Thursday morning. This morning’s 50 pip 1 hourly candle is a very sizeable candle considering the average movement of the EURUSD prior to the European session open.
Let’s do a bit of a Q&A now:
Did you take this trade yourself?
If you did, please let us know down below in the comments section!
How far could this EURUSD move up?
When analyzing the weekly chart it becomes clear that the previous top and weekly 61.8% Fibonacci retracement level is in the process of being broken by current price action. The next resistance Fib is the 78.6% at +/-1.43, which means plenty of wide open spaces.
Will price move up to that target in one straight line with no pullbacks?
No, certainly not. We need to zoom in to see what resistance points could cause pullbacks. Those pullbacks are exactly the opportunities trend traders will be using to join or add to the uptrend potential of this EURUSD.
What resistance points will be important?
The main levels to be aware of on the daily chart are the 1.40 psychological round number (plus some smaller Fib targets on lower time frames), the -0.618 target (purple) at +/- 1.4040, and the bigger -0.272 target (green) at +/- 1.4118.
Contrary to the bullish EURUSD market structure, the GBPUSD in fact had downside pressure the entire week. Later in Wednesday’s trading day price did see a bounce back up and earlier this morning price managed to break through the resistance line (purple).
With an early break the GBPUSD could see upside continuation later today. Whether price will build on a corrective chart pattern, such as a contracting triangle or bull flag, will be an important item to keep an eye on. Once a chart pattern is in place, the upside momentum continuation is likely upon the break of that chart pattern.
How do you see the USD? What are your targets for the EURUSD and NZDUSD? Let us know down below in the comments section!
As always, thank you for sharing this article, it is greatly appreciated! Wish you Good Trading today and the rest of the week!
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