New Zealand Dollar is under broad based selling pressure today as markets await RBNZ rate decision. RBNZ will keep the OCR unchanged at 1.75%, no doubt. It will also reiterate the neutral stance to “keep the OCR at this expansionary level for a considerable period of time” too. The main question is how RBNZ Governor Adrian Orr view the balance of risks. On the one hand, there will be stimulus from the government’s expansive fiscal policy. But on the other hand, there is threat of global trade war and slow down in China, it’s major trading partner.
Action Bias tables and charts of NZD/USD show down trend resumption with solid downside momentum. In particular, the lack of upside blue bar in the corrective rise since May shows that bears remained in control despite the rebound.
Further fall should be seen to 0.6779 (2017 low) support in near term. We’d maintain our view here that 0.6779 is a key support level. For short term trading one should tighten up the stop as NZD/USD approaches 0.6779 to guard of a strong and quick rebound.
For position trading, we’d suggest to have a little patience to see if NZD/USD would take out this level firmly. And, decisive break there will confirm completion of the corrective rise from 2015 low at 0.6102. That would also be accompanied by a head and shoulder top (ls: 0.7487, h: 0.7557, rs: 0.7436. And that will very likely resume the long term down trend from 2014 high at 0.8835, through 0.6102. It’s worth the wait.
