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NZD/USD: rare triple-convergence challenges down-trend

   
The kiwi is falling in a descending channel, which has gained fresh impetus lower following the RBNZ rate meeting last night at which policy-makers decided to cut base lending rates by 0.25% to 3.25%.

Normally I would expect such a strong down-trend to continue lower, however, there are contrary signals which are making me cautious about forecasting further downside.

As I have illustrated on the chart both the MACD and OBV are converging bullishly with price, and the MACD has formed a rare triple convergence, which taken together suggest there is a high probability of a reversal – if anything – not a continuation down.

Therefore a counter-trend move is quite possible, off of these convergences, with a move up to the channel highs at 0.7150 forecast, and a possible entry at 0.7145 to give confirmation.

Alternatively to get a further bearish signal, I would want to see the MACD break below the -0.00286 lows of the previous hump at the June 8 low, as this would break the triple convergence, probably leading to another bearish leg down to the S1 monthly pivot at 0.6895.
NZDUSD11

   
The kiwi is falling in a descending channel, which has gained fresh impetus lower following the RBNZ rate meeting last night at which policy-makers decided to cut base lending rates by 0.25% to 3.25%.

Normally I would expect such a strong down-trend to continue lower, however, there are contrary signals which are making me cautious about forecasting further downside.

As I have illustrated on the chart both the MACD and OBV are converging bullishly with price, and the MACD has formed a rare triple convergence, which taken together suggest there is a high probability of a reversal – if anything – not a continuation down.

Therefore a counter-trend move is quite possible, off of these convergences, with a move up to the channel highs at 0.7150 forecast, and a possible entry at 0.7145 to give confirmation.

Alternatively to get a further bearish signal, I would want to see the MACD break below the -0.00286 lows of the previous hump at the June 8 low, as this would break the triple convergence, probably leading to another bearish leg down to the S1 monthly pivot at 0.6895.
NZDUSD11



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