The first month of the year has exceeded its’ typical high-low range when compared to the 5, 10 and 20 month HL ATR calculation. On a weekly basis it remains within the averages over the same periods, so this does leave room for new highs or lows to be created. When you consider we have a plethora of data from the US and a rate decision tomorrow from RBNZ then I do fancy the chances of a new high to be taken out for the week, especially after having seen the technicals on the daily.
You can read my take on RBNZ's rate statement from December here but, in a nutshell they strongly hinted that this will remain the base for the foreseeable future and they expect inflation to pick up early 2016.
Technically I suspect we have seen a noteworthy swing low at 0.6347. Timing wise is works nicely (as highlighted by the peaks and troughs with purple and red arrows) but I also have a suspicion that USD Index is about to see a downside break to confirm a bearish wedge, and target 97. This should help provide support for NZDUSD, with any rate hold tomorrow or lack of dovish speaks likely to send NZD even higher.
Volume on the NZD futures chart (below) suggest last week as a potential turning point, as we have a bullish close on higher volume with a relatively small spread (open to close range). The fact the volume is higher on this candle than the bearish engulfing candle seen three weeks ago adds credence to the argument we have seen a 'change in hands'.
We have around 15 hours until RBNZ make their announcement so we have some flexibility in how we approach this. US data overnight may help NZD retrace towards 0.6425 support but if it hold above here then may provide a suitable entry point.
0.6590 is a suitable target as this also sits around the ATR projected setting for the weekly bullish scenario. Above here we also have the 50% retracement so these two levels are an appropriate target zone. If we see USD plummet then we can consider higher targets but we should also be aware of the Monthly S1 and 50 day MA which could cap any gains initially.