THE CALM BEFORE THE STORM?
NZD/USD as been a great pair to trade over the last month or so, giving us multiple trades and great risk/reward setups. Generally, this pair moves slightly slower than other majors such as EUR/USD , GBP/USD, etc but in recent weeks, especially this week, price has really slowed down and we have less volatility which we often see before a big move. Is this the calm before the storm, will NFP data today help get this pair moving?
We are currently holding our short position on this pair as shown on our chart, where as explained on our DXY / USD chart, we could expect more upside on the USD, therefore telling us to hold our long USD position on our short NZD/USD was a good swing trade to hold as we were trading with the overall bullish USD trend.
On our chart, we have two zones highlighted where if we see price reach we will be looking to enter this market. Our first zone, the higher zone, set at 0.6260 - 0.6277 is where we will be looking to add short positions on this pair if we can see a pullback to this region, potentially today depending on NFP data. At this level we can expect price to find resistance at its previous lower high on the 4 hour chart where price will take liquidation before a new leg lower.
Our lower region of interest is set at 0.6050-0.6030 where if we can see price reach, we will be looking to enter long positions and hedge our current short trade. This is in confluence with our DXY chart where an extended USD push would see this region met.
On today's NFP if we are to see a strong reaction to the data either area could be hit quickly. As per our DXY / USD chart, we have posted today we can see more upside potential for the USD. If we can see an extended bullish push on the USD we may see a short reversal mid-week next week, unless something drastic happens today. This means we could see a push lower on NZD/USD to reach our lower region of interest before a reversal either today, but likely next week.
A drastic sell-off on the USD with NFP would see our higher region of interest reached today which could open the door to another short position added to our current short before taking a long next week. We can expect lots of movement (we also hope!) as price is stuck in consolidation as highlighted on our chart but we aware of trading this range as NFP is almost certain to manipulate and liquidate around the range first before the real move!