Bottom line: NZDUSD bullish structure remains intact until prices stay above 0.5470 lows. An interim support was carved at 0.5908 levels on April 22, 2020 and bulls remain poised to target 0.6450 levels till 0.5900 holds.
Fundamental Outlook:
NZDUSD continues to march higher after last week’s low at 0.5908 as the country begins to gradually roll over after lockdown. It is expected to gain further momentum for now but watch out for bearish pressure around May 13, when Reserve Bank of New Zealand meets.
SPX500 along with Dow Jones and NASDAQ inched higher by over 2.5% yesterday and managed to close at 2939. SPX500 futures continue to trade higher at 2970 while we are writing this article and it remains to be seen how the indice behaves when US markets open.
Despite the negative US GDP figures (-4.8%), markets continued to rally amidst COVID-19 drug trials, earnings and the Fed leaving rates unchanged. There are also talks of further stimulus package by the Fed if required.
Technical Analysis:
NZDUSD remains in control of bulls since 0.5470 lows and it is carving a series of higher highs and higher lows since then. As discussed earlier, it has carved a higher low around 0.5900 levels last week and NZDUSD bulls should be determined to push towards 0.6450 levels for now.
Immediate resistance is also seen through 0.6450, while interim support remains around 0.5900 mark. A push through 0.6450 would confirm that bulls have registered themselves and NZDUSD medium term target remain intact towards 0.6760 levels.
Structurally, NZDUSD has produced a multi-year downtrend between 0.8850 and 0.5470 levels. Ideally the entire boundary should be retraced in the next several months. The first potential corrective wave has begun since 0.5470 lows.
The fibonacci 0.382 retracement of the entire drop is seen towards 0.6750, while December 2019 high is at 0.6755. Hence high probability remains for the first corrective wave to push towards 0.6760 levels before it can produce any meaningful correction or pullback.
Most traders might be looking to hold long positions taken earlier with protective stop around 0.5470 and target potential towards 0.6760 levels respectively.
Prepared by
Harsh Japee, Technical Analyst.
NZDUSD Chart
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