Last week the USD resumed the bullish momentum after some decent economic data while this week the RBNZ should hike rates by 50 bps

Daily Briefing, May 8 – RBNZ Surprise Rate Cut, How to Trade Kiwi Today?

Posted Wednesday, May 8, 2019 by
Arslan Butt • 2 min read

Good morning, traders.

The Asian session exhibited massive fluctuations as the Reserve Bank of New Zealand shook the market with a surprise rate cut. The Reserve Bank reduced the OCR (Official Cash Rate) to 1.50% at today’s Monetary Policy Statement.

The press announcement consisted of support for lowering the OCR on the back of weak inflation, curbing domestic economy, and global risks. The rate cut sentiments were there in the market, but no one was ready for today’s price action. Besides that, RBNZ didn’t publish forward guidance about future OCR moves.

In addition to RBNZ, the Chinese trade balance was on radar. As per the report, China’s trade balance for April released at CNY 93.6bn versus CNY 155.71bn forecast and CNY 221.236bn beforehand. The exports came at +3.0% y/y vs. -8.0% anticipated and +21.3% previously, while imports were +10.3% y/y vs. -1.0% expected and -1.8% previously.

What’s Next on the Economic Calendar?

Well we do have a few low impact economic events such as Swiss Unemployment rate, German Industrial Production m/m and
ECB Monetary Policy Meeting Accounts, but the market is most likely to follow technical setups.

With that, I’m going to share some ”Get Ready” setups to trade during the European session today.

NZD/USD – Spiked Lower, Bearish Trendline Underpins

As I often say, patience is the key to success in the forex market. The NZD/USD the hourly candle showed a sharp bearish trend to violate the bearish trendline support level of 0.6550. Most traders jumped in ride the trend, without waiting for technical confirmation and are now stuck in a bullish reversal.

NZD/USD exhibited a sharp bearish price action but reversed the trend  in the very next movement. As we can see, the hourly candle went below bearish trendline support of 0.6550 but gave hourly closing inside the bearish channel.

I hope you aren’t stuck in the same trap, but if you are stuck then it’s better to wait for the NZD/USD pair to reverse back downward. The pair is facing solid hurdle around 0.6600 along with the same old support level of 0.6560 today.

Support Resistance
0.6616 0.6663
0.6587 0.6682
0.654 0.6729
Key Trading Level: 0.6635

NZD/USD – Trade Plan
Consider staying bearish below 0.6620 with a stop loss above 0.6640 and take profit around 0.6560.

CHF/NZD – Ascending Triangle Pattern

Another pair that is gaining popularity today is the CHF/NZD as investors were anxiously waiting for the ascending triangle pattern’s breakout. After the rate decision, the pair placed a sharp upward movement until 1.4960, but just like NZD/USD, investors started taking profit.

Consequently, the pair fell back in the ascending triangle pattern which is providing it support around 1.4900. We can’t expect further buying until CHF/NZD closes a couple of hourly candles outside this triangle pattern.

Support Resistance
1.4920 1.4950
1.4875 1.4980
1.4845 1.5025
Key Trading Level: 1.4900

CHF/JPY – Trade Plan
I’m gonna wait and watch if CHF/JPY closes a candle outside 1.4900 as if it does, I will take a buy position with a target of 1.5000.

Good luck!

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