Trading opportunities for currency pair: the buyers broke the trend line on the weekly timeframe in February. A pinbar formed last week. At its current position, the pinbar is a weak signal for the strengthening of the NZD, but this isn"t worth ignoring. In this idea I expect to see a strengthening of the Kiwi to 0.7231 (38.2% from 0.6235 to 0.8834) using a double bottom pattern. Growth will cancel if the weekly candle closes below 0.6564.
The last NZD/USD idea I made came out on 18th January. Back then the New Zealand dollar was being quoted for 0.6463. As part of a correction, I expected the pair to undergo a short-term growth to 0.6570 since a pinbar had formed on the daily in January.
As was the risk, the idea was cancelled out after Friday"s candle was covered. The growth resumed later on from 0.6346. On 3rd February the 0.6570 target level was reached. Rising oil prices had a positive effect on the commodity currency.
On Wednesday, March 9th, the Reserve Bank of New Zealand (RBNZ) unexpectedly dropped its interest rate by 25 basis points to 2.25%. The drop in rates was linked to weak Chinese demand and for that in the dairy industry. On this news the NZD fell to 0.6641. The fall was quite conservative since the Shanghai Composite grew, as did oil.
The New Zealander won back its Wednesday"s losses against its US counterpart on Friday. Despite the RBNZ decision to drop rates, the NZD received support from the previous dairy auction. 1st March"s Global Dairy Trade auction on the New Zealand stock exchange showed a growth of 1.4% to 646 against a previous 638 on 16th February. Dairy is New Zealand"s main export produce.
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We currently have a break in the trend line and a pinbar. The pinbar at its current position is a weak signal that the NZD is to strengthen. Nevertheless, it"s worth taking a closer look at a double bottom with 0.6258 and 0.6346 minimums. The shift of the right minimum upwards is a sign of a break in the 0.6896 resistance with a subsequent growth to 0.7231 (32.8% from 0.6235 to 0.8834). Growth to cancel with a close of the weekly candle below 1.6564.
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