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    Analytical review of the currency pair NZD/USD on 11.03.2016

    NZD/USD

    Technical data of the currency pair:

    Previous closing: 0.6668;
    Daily range: 0.6648-0.6705;
    Opening: 0.6668;
    52- week range: 0.6233-0.7752;
    Annual revenue: -8.43%;
    Change in % for the previous day: 0.45.


    Analytical review:

    • In the last four sessions the currency has traded in the range of 0.6740-0.6815. On Wednesday the currency pair exceeded support level of 0.6740and consolidated below this level. NZD fell in price by 1.60%.
    • On Wednesday Reserve Bank of New Zealand (RBNZ) unexpectedly lowered interest rate by 25 basis points to 2.25%. Bank executives have explained that this decision was taken because of slowdown in the global economy and low inflation rate in the country.
    • China is an important strategic partner of New Zealand. Further decline in NZD is caused by the decrease in exports to China by 25% in February.
    • The “Commitments of Traders” shows decline in long positions by 1240 contracts up to 12386 contracts.
    • During the Asian session it became known that business activity index in the manufacturing sector (PMI) fell to 56.0, which is by 3.3% less than the previous value.

    Summary:

    • Unexpected reduction of the interest rate by RBNZ, economic problems in China, slowdown of the economic growth pace, increased volatility in the market put pressure on the currency pair. According to “COT”, large investors have decreased the number of long positions.
    • In the near future the NZD will weaken against the USD. We recommend to open short positions.

    Trading tips for the currency pair NZD/USD

    Medium-term trading:
    At the moment the currency is traded in the gap of 0.6715-0.6740. If the price maintains this level and in case of the respective confirmation (such as pattern Price Action), we recommend to open short positions. Risk per trade is not more than 2% of the capital. Stop order can be placed slightly above the signal line. Take profit can be placed in parts at the levels of 0.6660, 0.6580 and 0.6530 with the use of trailing stop.


    Short-term trading: At the moment the currency is traded between the local support and resistance levels of 0.6655 – 0.6700. We recommend to enter the market after breaking down and testing these levels. The positions can be opened near the signal line, and the nearest support/resistance levels. Risk per trade is not more than 3% of capital. Stop-order can be placed slightly above/below the signal line. Take profit should be placed in parts of по 50%, 30% and 20% with the use of trailing stop.



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