The NZD/USD is trading near short term lows in the wake of the Reserve Bank of New Zealand delivering an expected interest rate hike.

The NZD/USD stumbled lower in the past two days as the Reserve Bank of New Zealand was expected to raise their interest rate by another 0.50% earlier this morning.  Intriguingly while the NZD/USD currency pair is trading within sight of short term lower values, the technical trend has actually incrementally ticked upwards the past twelve hours. The upwards movement started to occur before the central bank actually raised their borrowing costs.

The interest rate hike from New Zealand’s central bank was widely anticipated and now that result is official, it appears the NZD/USD can be expected to potentially retrace higher ratios it has recently seen which were higher. On the 12^th of August the NZD/USD was trading near the 0.64650 mark, this before it started to tumble as the weekend began. Yesterday saw a low of approximately 0.63180. Early morning volatility was certainly on display earlier today, but the fireworks may become less pervasive in the coming hours.

The NZD/USD is Straddling Important Higher Support Levels via a One Month Chart

While the lower move the past couple of days may have made bullish speculators nervous, the ability of the NZD/USD to find support near the 0.63200 level could prove important.  Yes, there will be reversals lower, which a natural part of the trading day, but if current support ratios prove durable this could spark the speculative notion the NZD/USD remains oversold.

• If the NZD/USD is able to hold the 0.63450 to 0.63350 vicinity as durable support, more buying of the Forex pair could emerge.
• Traders cannot be blamed for targeting the 0.63750 to 0.63850 level as short term upwards goals if they choose to be buyers.

Upward Trend of the NZD/USD could prove Attractive to Speculative Bulls

The NZD/USD was near the 0.62100 level on the 5^th of August, which was a depth tested since the 29^th of July and proved rather consistent as support. Since the 5^th of August the NZD/USD has incrementally been able to gain and raise its technical support levels. This morning’s continued climb from lows seen yesterday may signal additional bullish behavior is favored by financial houses as they consider the outlook of the Reserve Bank of New Zealand as it proves to be hawkish.

Traders should remain realistic regarding their speculative ambitions. The NZD/USD is able to become volatile and moves downward will certainly occur, but wagers on upside price action based on the belief that support is beginning to look technically stronger could spark more pursuit of perceived resistance which appears vulnerable and within grasp. Traders looking for additional upside momentum in the near term cannot be blamed.

NZD/USD Short-Term Outlook

Current Resistance: 0.63780

Current Support: 0.63330

High Target: 0.64120

Low Target: 0.63075

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RBA hikes by 0.50%, not the expected 0.25%

My previous signal on 31st May was not triggered, as the low of that day was well below the support level I gave at 0.7162.

Today’s AUD/USD Signals

Risk 0.75%

Trades must be entered prior to 5pm Tokyo time Wednesday.

• Go short following a bearish price action reversal on the H1 time frame immediately upon the next touch of 0.7213, 0.7248, or 0.7275.
• Place the stop loss 1 pip above the local swing high.
• Move the stop loss to break even once the trade is 20 pips in profit.
• Remove 50% of the position as profit when the price reaches 20 pips in profit and leave the remainder of the position to ride.

Long Trade Ideas

• Go long following a bullish price action reversal on the H1 time frame immediately upon the next touch of 0.7143 or 0.7125.
• Place the stop loss 1 pip below the local swing low.
• Move the stop loss to break even once the trade is 20 pips in profit.
• Take off 50% of the position as profit when the price reaches 20 pips in profit and leave the remainder of the position to ride.

The best method to identify a classic “price action reversal” is for an hourly candle to close, such as a pin bar, a doji, an outside or even just an engulfing candle with a higher close. You can exploit these levels or zones by watching the price action that occurs at the given levels.

AUD/USD Analysis

I wrote in my previous forecast on 31^st May that the technical picture had become more bullish, but that it remained prone to a reversal. I thought that the best approach for the day was to look for long trades.

My key support levels were off as entry points, but I was correct that the best trade for the day would be a long.

The broad technical picture in this currency pair now is one of a choppy, wide range, making trading unpredictable except when fading price extremes. This would point to a long trade from a bullish bounce at 0.7143 or a short trade from a bearish reversal at 0.7275. Technically, the support level at 0.7143 looks likely to be strong as it is so well-defined, as can be seen within the price chart below.

There is an important new fundamental factor affecting the AUD today: the Reserve Bank of Australia surprised the market a few hours ago by hiking its interest rate by 0.50% when a hike of only 0.25% was expected. This could be expected to boost the price, but although we saw an initial spike as high as 0.7245 immediately following the hike, the price quickly returned to where it started. However, the price is rising slowly again.

I think the smart thing to do will be to wait for two consecutive higher hourly closes above the resistance level at 0.7213, and then enter a cautious long trade if you want to trade this currency pair today.

There is nothing of high importance scheduled today regarding either the AUD or the USD.

We expect the lira to continue to decline, especially if the pair closed above the resistance levels of 14.91.

Today’s recommendation on the lira against the dollar

Risk 0.50%

None of the buy or sell trades of the recommendation were activated yesterday

Best entry points buy

• Entering a long position with a pending order from 14.68 levels
• Set a stop-loss point to close the lowest support level 14.46.
• Move the stop loss to the entry area and continue to profit as the price moves by 50 pips.
• Close half of the contracts with a profit equal to 75 pips and leave the rest of the contracts until the strong resistance levels at 14.85.

Best selling entry points

• Entering a short position with a pending order from 14.99 levels
• The best points for setting the stop loss are closing the highest levels of 14.98.
• Move the stop loss to the entry area and continue to profit as the price moves by 50 pips.
• Close half of the contracts with a profit equal to 75 pips and leave the rest of the contracts until the support levels 14.40

The Turkish lira swallowed up yesterday’s gains, as the lira rose after the interest rate decision in the United States of America, which rose 50 basis points. All financial assets benefited from the dollar’s decline after the interest rate decision as the Fed’s decision was priced earlier. During today’s trading, the lira fell after the Turkish Statistical Institute revealed in a report that annual inflation in Turkey rose by 69.97% in April. This number represents an increase from March when the Consumer Price Index (CPI) rose 61.14% year over year. The biggest jump was recorded in transportation prices, with prices jumping insanely by 105.86% year on year, followed by food and non-alcoholic beverages with 89.10%. The smallest inflation rate was observed in telecoms at 18.71%. The Consumer Price Index increased by 7.25% compared to the previous month.

On the technical front, the Turkish lira fell slightly against the dollar during today’s trading, as the lira swallowed up yesterday’s gains. In general, the lira is still trading within a limited trading range. The pair also rose above the moving averages 50, 100 and 200, respectively, on the four-hour time frame as well as on the 60-minute time frame. The pair is trading the highest support levels that are concentrated at 14.75 and 14.69 levels, respectively. On the other hand, the lira is trading below the resistance levels at 14.90 and 14.99. We expect the lira to continue to decline, especially if the pair closed above the resistance levels of 14.91. Please adhere to the numbers in the recommendation with the need to maintain capital management.

Today’s pivotal point is likely to be 0.7083.

My last signal from 27^th April produced a profitable long trade from the bullish pin bar which rejected the support level I had identified at 0.7082.

Today’s AUD/USD Signals

Risk 0.75%

Trades may only be entered before 5pm Tokyo time Wednesday.

• Go short following a bearish price action reversal on the H1 time frame immediately upon the next touch of 0.7183.
• Place the stop loss 1 pip above the local swing high.
• Move the stop loss to break even once the trade is 20 pips in profit.
• Remove 50% of the position as profit when the price reaches 20 pips in profit and leave the remainder of the position to ride.

Long Trade Ideas

• Go long following a bullish price action reversal on the H1 time frame immediately upon the next touch of 0.7082 or 0.7006.
• Place the stop loss 1 pip below the local swing low.
• Move the stop loss to break even once the trade is 20 pips in profit.
• Remove 50% of the position as profit when the price reaches 20 pips in profit and leave the remainder of the position to ride.

The best method to identify a classic “price action reversal” is for an hourly candle to close, such as a pin bar, a doji, an outside or even just an engulfing candle with a higher close. You can exploit these levels or zones by watching the price action that occurs at the given levels.

AUD/USD Analysis

I wrote in my previous piece on this currency pair on 27^th April that the price was still making lower lows and lower highs, which suggested the medium-term bearish trend was still in force.

Therefore, I was looking for a bearish reversal at 0.7235, which would present an attractive short trade entry point.

I was correct about the primary direction of the day, as the price fell over the day and reached as low as the support level which I had identified at 0.7082 shortly before the Tokyo close, but the price gave a nice short-term long trade from that level when it was reached, signalling its intention to move higher with a bullish pin bar on the hourly chart.

The price now is back where it was one week ago. The RBA just announced a 0.25% rate hike which some analysts had been expecting, but which surprised many who had been expecting a hike of only 0.15%. This caused a short-term bullish price spike of approximately 1%, but this quickly ended within 45 minutes, with the price retracing back to its consolidation area just above the nearest support level at 0.7082.

It seems clear that this support level at 0.7082 is going to be today’s pivotal point. The price is clearly within a long-term bearish trend, so the highest probability setup that might emerge today would probably be a short trade entry following the price getting established below 0.7082. This would likely trigger a further fall to the 0.7006 area which could be strong long-term support.

On the other hand, if 0.7082 holds as support, we will probably see the price rise over the short term.

Regarding the USD, there will be a release of JOLTS Job Openings data at 3pm London time. There is nothing of high importance due today concerning the AUD.

Aussie reaches new 9-month high price.

My last signal from 22^nd March was not triggered, as there was no bearish price action when each of the resistance levels which I had identified were first reached.

Today’s AUD/USD Signals

Risk 0.75%

Trades must be taken prior to 5pm Tokyo time Wednesday.

• Go short following a bearish price action reversal on the H1 time frame immediately upon the next touch of 0.7636 or 0.7649.
• Put the stop loss 1 pip above the local swing high.
• Adjust the stop loss to break even once the trade is 20 pips in profit.
• Take off 50% of the position as profit when the price reaches 20 pips in profit and leave the remainder of the position to run.

Long Trade Ideas

• Go long following a bullish price action reversal on the H1 time frame immediately upon the next touch of 0.7569, 0.7548, or 0.7536.
• Put the stop loss 1 pip below the local swing low.
• Adjust the stop loss to break even once the trade is 20 pips in profit.

• Take off 50% of the position as profit when the price reaches 20 pips in profit and leave the remainder of the position to run.

The best method to identify a classic “price action reversal” is for an hourly candle to close, such as a pin bar, a doji, an outside or even just an engulfing candle with a higher close. You can exploit these levels or zones by watching the price action that occurs at the given levels.

AUD/USD Analysis

I wrote in my previous piece on this currency pair on 22^nd March that the recent price rise seemed to have run out of momentum, so I was looking for short trades in this currency pair that day. I thought that s good swing trade could set up if the price got back to test 0.7430 and failed there.

This call was enough to keep anyone out of trouble, but I was quite wrong about direction, with the day being a strong up day after the price broke out above 0.7430.

The technical picture is now much more bullish, with the price breaking upwards very strongly on high volatility immediately after the RBA’s Rate Statement was released, to trade at a new 9-month high price. The Australian Dollar is unquestionably the strongest major currency right now.

This initial bullish spike, at the time of writing, is running into the round number at 0.7600 which might halt its advance, but it is too early to say.

This upwards movement right now is driven not by the RBA’s Cash Rate, which remained unchanged as expected at 0.1%, but by the Rate Statement, in which the Bank continues to see a tightening labour market and rising earnings, which implies that bearish pressure on the Bank to begin to look to hike rates is rising.

This market is ripe for day traders to trade long on shorter time frames, buying dips as they turn to rise, while being careful to take profit before the rise runs out of steam. It might go all the way to the next resistance level at 0.7636, or even 0.7650.

Over the medium-term, I see a retracement to 0.7569 as likely to provide the best potential entry point for a long trade if there is bullish bounce there in the price action.Concerning the USD, there will be a release of ISM Services PMI data at 3pm London time. There is nothing of high importance due today regarding the AUD.

I believe that waiting for signs of exhaustion will continue to be the way going forward, as we are still very much in a downtrend.

The NASDAQ 100 has rallied significantly during the trading session on Wednesday, despite the fact that the Federal Reserve raised interest rates by 25 basis points. Regardless, there are a lot of concerns out there although we are probably due for some type of recovery rally. You could even make an argument for a bit of a falling wedge, which is a bullish sign, but we have not broken through the potential downtrend in order to make that happen.

Even if we do rally at this point, I think it is probably only a matter of time before we see sellers, which could open up the possibility of yet another shorting opportunity. I am not willing to short it quite yet, but I do recognize that the 14,000 level might be a bit too much to deal with. The Federal Reserve is more likely than not to continue raising rates, so the market will have to come to grips with that. The biggest problem I see with this index is the fact that the NASDAQ 100 is full of high-growth stocks, which need high growth to remain bullish.

This does not suggest that we cannot rally, just that it is very unlikely that we are simply going to continue straight up in the air. I believe that waiting for signs of exhaustion will continue to be the way going forward, as we are still very much in a downtrend. I believe that the 14,000 level is a major barrier, followed by the 14,300 level. Because of this, I am going to sit on the sidelines and let the bounce happen because to think that we are done selling off is probably a bit much at this point.

The 13,000 level underneath has been a hard barrier to break, so a bounce and signs of exhaustion could be a sign that the 13,000 level would be a target again. The 50 Day EMA is currently at the 14,400 level and sloping lower, so therefore I think there is plenty of dynamic resistance above. Whether or not this rally last couple of days is a completely different question, but right now I think just simply letting the market do its thing and then take advantage of a continuation of the overall trend.