Kiwi At The Talking Spot

Hello Forex Traders!

On Thursday the RBNZ announced that the interest rate would remain the same for New Zeeland at 2.5%. This had a positive effect on the New Zeeland Dollar, increasing its value against all of the major currencies.  What can we expect from the NZD in the near future? In today’s article we will examine a couple of Kiwi crosses and see whether there are interesting trades heading our way!

Before we do that though, please note these articles of recent analysis:

1)      Forex analysis on the CAD 

2)      Article on EURAUD and USDCHF 

3)      Forex majors 


12- 9- 2013 nu d

The NZDUSD made an impulsive 5 wave down (black dotted lines on chart) during April, May and June of this year, but has so far failed to continue to the downside. Here are my key observations for this currency pair:

1)      Could not break bigger weekly support trend line (lower dotted purple)

2)      Could not break weekly horizontal support (solid green line)

3)      Recently has been building a range formation on the daily chart with price bouncing back and forth in between those 2 levels (orange dotted)

Price has now returned back to the top of the range. Will the currency bounce yet again or will it break?

One method would be to keep an eye on the 1 hour channel. If price keeps pushing up within this channel, the top of the range will eventually break. If, however, price breaks through the bottom of the channel, then a move back down has turned into a good probability. The turn could be a quick close and reverse, although a slower turn around pattern such as head and shoulders is just as likely. Something similar to the bottom inverse head and shoulders.

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The EURNZD and GBPNZD are in a very similar situation as the NZDUSD and the same analysis and concepts described above are valid for the EN as well.

12- 9- 2013 en d

From a weekly perspective, the Kiwi At The Talking SpotGBPNZD is at the top of a down trend channel and has made double top at the top of that channel. So far the break out of the NZD weakness which was discussed as an opportunity in a recent article has not materialized.

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Last but not least the AUDNZD cross. The AUD has been in a very steep down trend against the Dollar, Euro, and Pound, but also against the Kiwi. This is a classical example where usually the NZD and AUD are seen as having a strong correlation towards other currency pairs such as the USD, but this concept does not prove very useful if the currency cross itself is a trend as well. That was the case with the AUDNZD.

Most recently the AUDNZD made a strong move up, but the NZD interest rate announcement slammed the ambitions of the Aussie and support seems to have given away for more bearishness.

The weekly chart:

12- 9- 2013 an w

1)      Currency stopped at 786 Fibonacci and a fall could mean the next target is the 886 Fib at 1.0980

2)      Last week’s candle was a huge rejection candle with a big wick on the top and a bearish close

Daily chart:

12- 9- 2013 an d

1)      Uptrend on day chart has been broken the up trend channel (green dotted) and can be rebranded into a bear flag considering the shallow angle it has

2)      The break of horizontal daily support (purple dotted) today is very impulsive

I would wait for a close of today’s daily candle to see if the close of the candle is below the support level. IF the wick on the daily candle is not too big (not more than 25%), then we are seeing a sustainable break out of the AUDNZD to the downside and I would look for a continuation of that bearishness on the shorter time frame. If you prefer to trade daily charts, either a break of today’s low or a retracement of today’s candle are methods of entering the downside momentum.

Are you planning to trade the AUDNZD? Did you ever trade it? Where would you put your stop loss if you did take a short based on the daily candle? Let us know the answer in the comment section down below and I will share my views on the stop loss placement.

Thanks for reading and sharing and wish you all Good Trading!

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