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Today’s Trading Edge: NZD/USD – Stabilizes Even Though US 10-Year Yields Surge to 3.0%

Posted by Edward Moya on Dec 27, 2013 10:12:00 AM

WWM NZDUSD DEC 27 2013

On December 10th, I identified a potential Bearish Gartley pattern that was respected and kept the bearish channel intact.  The initial price objective was reached and further commodity currency pressure has so far supported a move lower. 

With thin markets firmly in place, the next key release for NZD/USD will be Chinese Manufacturing PMI on Tuesday, New Year’s Eve.  A positive beat may occur and with that, we may a slight rally for the kiwi.  The key storyline for this thin trading week is that US 10-year yield has hit 3.0% and the U.S. dollar has yet to display a significant move higher against the commodity currencies. 

Price on the daily chart for NZD/USD is displaying a potential double bottom at .8150 in the short-term (highlighted by two green arrows).  So far, we have seen short covering triggering a climb towards the Christmas gap at .8180. It is at this level that some selling interest may prevent a move above .8200.  Eventually we may see minimum momentum drive a move towards the 50-day Simple Moving Average at .8265 and possibly breaking the downward channel. 

The trade: Buy NZDUSD at .8215 with a stop loss at .8190 and a take profit at .8265.  The Risk/Reward Ratio is 1:2.

Edward J. Moya

Technical Strategist

WorldWideMarkets Online Trading

 

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