Market News & Analysis


Top Story

NZD/USD Getting Tired

The New Zealand Dollar has been on a tear against the US Dollar since putting in a low on October 1st near .6220.  From that point, NZD/USD put in an inverse head and shoulders and reached the target level near .6500 on December 2nd.  The pair then proceeded to push higher through the 200 Day Moving Average near .6540 and the 61.8% Fibonacci retracement level from the July 19th highs to the  October 1st lows at .6570.  

Source: Tradingview, City Index

New Zealand’s economy is greatly affected by the Chinese growth.  The run up may have been due to high expectations that a Phase One US-China trade deal would get done before the December 13th tariffs were to be imposed.  The pair put in a high of .6635 on Friday and pulled back.  In doing so, on a daily timeframe the pair put in a shooting star candlestick formation.  This formation is indicative of a possible reversal.  In addition, the RSI was in overbought territory, which also suggests price may have been ready for a pullback. This price action has the looks of a “Buy the rumor, sell the fact” on the US-China trade deal.

Where to Now?

NZD/USD has pulled back from Friday’s highs and is currently trading near .6575.  On a shorter, 240-minute timeframe,  the pair has put in a head and shoulders formation and broken the neckline near .6600.  The target for a head and shoulders formation is the distance from the head to the neckline added to the breakdown point of the neckline.  This level is .6535, which is also near the 200 day moving average (see daily).

Source: Tradingview, City Index

Below there, there is horizontal support and a rising trendline near .6500, and then the 38.2% Fibonacci retracement of the October 1st lows to the December 13th highs at .6473.  Resistance is above at the neckline of the head and shoulders near .6600 and then the highs from December 13th at .6637. If NZD/USD does decide to continue to move higher above those resistance levels, the pair can move all the way back up to the July 19th highs at .6789 with little in the terms of resistance.


Disclaimer

This report is intended for general circulation only. It should not be construed as a recommendation, or an offer (or solicitation of an offer) to buy or sell any financial products. The information provided does not take into account your specific investment objectives, financial situation or particular needs. Before you act on any recommendation that may be contained in this report, independent advice ought to be sought from a financial adviser regarding the suitability of the investment product, taking into account your specific investment objectives, financial situation or particular needs.

GAIN Capital Singapore Pte. Ltd., may distribute reports produced by its respective foreign entities or affiliates within the GAIN Capital group of companies or third parties pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the report is distributed to a person in Singapore who is not an accredited investor, expert investor or an institutional investor (as defined in the Securities Futures Act), GAIN Capital Singapore Pte. Ltd. accepts legal responsibility to such persons for the contents of the report only to the extent required by law. Singapore recipients should contact GAIN Capital Singapore Pte. Ltd. at 6826 9988 for matters arising from, or in connection with the report.

In the case of all other recipients of this report, to the extent permitted by applicable laws and regulations neither GAIN Capital Singapore Pte. Ltd. nor its associated companies will be responsible or liable for any loss or damage incurred arising out of, or in connection with, any use of the information contained in this report and all such liability is hereby expressly disclaimed. No representation or warranty is made, express or implied, that the content of this report is complete or accurate.

GAIN Capital Singapore Pte. Ltd. is not under any obligation to update this report.

Trading CFDs and FX on margin carries a high level of risk that may not be suitable for some investors. Consider your investment objectives, level of experience, financial resources, risk appetite and other relevant circumstances carefully. The possibility exists that you could lose some or all of your investments, including your initial deposits. If in doubt, please seek independent expert advice. Visit cityindex.com.sg for the complete Risk Disclosure Statement.

Important Notice:

Cryptocurrencies are not legal tender currency and trading of derivatives on Cryptocurrencies are currently not covered under any regulatory regime in Singapore. Consequently, investors should be aware they do not have protection under the Securities and Futures Act (Cap. 289). Please ensure that you are fully aware of the risks.