Weekly
• Last Candlesticks pattern: N/A
• Time of formation: N/A
• Trend bias: Up
Daily
• Last Candlesticks pattern: Shooting star
• Time of formation: 20 Sep 2017
• Trend bias: Up
NZD/USD – 0.7186
Although kiwi rebounded to 0.7435 last week, renewed selling interest did emerge there and has fallen again (we recommended in our previous update to sell kiwi at 0.7395 and a short position was entered on such bounce), the subsequent selloff has justified our bearishness and suggest the rebound from 0.7132 has ended at 0.7435, hence downside bias remains for another test of this support, however, break there is needed to retain bearishness and signal another leg of the corrective decline from 0.7558 top is underway, then further fall to 0.7095-00 and then 0.7050 would follow but near term oversold condition should limit downside to 0.7000-10 (psychological support and 100% projection of 0.7558-0.7132 measuring from 0.7435) and 0.6950 would hold from here, bring rebound later.
On the upside, whilst initial recovery to 0.7225-30 cannot be ruled out, reckon upside would be limited to 0.7270-75 and bring another decline. Above the Tenkan-Sen (now at 0.7307) would risk test of 0.7325-30 but reckon the upper Kumo (now at 0.7365) would hold, bring another decline later. A break of the upper Kumo would risk another bounce to said resistance at 0.7435 but only breach there would shift risk back to upside and signal the corrective decline from 0.7558 has ended, bring further gain to 0.7500. then towards said resistance at 0.7558.
Recommendation: Short entered at 0.7395 met target at 0.7195 with 200 points profit and would sell again at 0.7250 for 0.7050 with stop above 0.7350.
On the weekly chart, although rebounded last week, kiwi met renewed selling interest at 0.7435 and has dropped again in line with our bearish expectation, signaling the recovery from 0.7132 has ended at 0.7435 and mild downside bias remains for the corrective fall from 0.7558 top to bring retracement of recent upmove, below said support at 0.7132 would add credence to this view and extend weakness to the lower Kumo (now at 0.7081), then 0.7000-10 (psychological support and 100% projection of 0.7558-0.7132 measuring from 0.7435), however, near term oversold condition should limit downside to 0.6950 and reckon 0.6880 would hold from here, bring rebound.
On the upside, expect recovery to be limited to 0.7240-50 and 0.7300 should hold, bring another decline. Only above said resistance at 0.7435 (last week’s high) would abort and shift risk back to upside, this would also suggest the pullback from 0.7558 has ended instead, bring further gain to 0.7500. Only a break of 0.7558 would extend medium term erratic upmove from 0.6074 (2015 low) to 0.7690-00 (61.8% projection of 0.6074-0.7485 measuring from 0.6818) and later towards 0.7780-85 (61.8% Fibonacci retracement of 0.8836-0.6074), however, reckon upside would be limited to 0.7890 and price should falter well below resistance at 0.8035.
