The New Zealand dollar shrugged off last night’s headline report that showed China factory activity fell to an 11-month low. China flash HSBC/Markit Purchasing Managers’ index skidded to 49.2 in March, much lower than the forecast of 50.6, and the prior reading of 50.7.
In my last kiwi post, I highlighted a potential double-bottom pattern could support a bounce higher towards the 50-day SMA at .7515. Price not only captured that noted level, but now is comfortably above the 100-day SMA. The bullish trend may accelerate this morning if we see US CPI come in below 0.2% forecast.
NZD/USD could remain bid because most economist are expecting the Reserve Bank of New Zealand (RBNZ) to keep rates on hold at 3.5% and that the next move from the Bank will be a rate hike.
Price action on the NZDUSD daily chart shows that the current rally could form a bearish Gartley pattern at .7730 level. Point D is targeted by both the 78.6% Fibonacci level of the X to A leg and the 161.8% Fibonacci expansion level of the B to C move.
In the event of a bearish reversal, key support may target the 50-day SMA which is now trading around the .7470 level.
The trade: Buy NZD/USD at .7630 with a stop loss at .7580 and a take profit at .7730. The Risk/Reward Ratio is around 1: 2
Edward J. Moya
WorldWideMarkets Online Trading