NZD/USD: NZD is strengthening

Current trend

NZD is gaining ground against USD during today's morning trading session, trying to consolidate above 0.6700. The published macroeconomic statistics from China provide significant support to the instrument, while the data from New Zealand turned out to be worse than market expectations. China reported a sharp 5.6% YoY rise in Industrial Production in August, after rising by 4.8% YoY in the previous month. Experts expected an increase of 5.1% YoY. Retail Sales also showed solid growth of 0.5% YoY in August after falling by 1.1% YoY in July. Analysts had expected zero dynamics.

In turn, the published Westpac Survey of consumer sentiment in New Zealand indicated a decline in Q3 2020 from 97.2 to 95.1 points, while analysts expected a moderate increase in the indicator to 102.4 points.

Support and resistance

In the D1 chart, Bollinger Bands are reversing horizontally. The price range is narrowing, reflecting appearance of multi-directional dynamics in the short term. MACD has reversed to growth having formed a new buy signal (located above the signal line). Stochastic is strengthening more actively but is approaching its highs rapidly, which reflects risks of the overbought NZD in the ultra-short term.

Existing long positions should be kept until technical indicators are clarified.

Resistance levels: 0.6734, 0.6764, 0.6787.

Support levels: 0.6700, 0.6664, 0.6635, 0.6600.

Trading tips

To open long positions, one can rely on the breakout of 0.6734. Take-profit – 0.6787. Stop-loss – 0.6700.

A rebound from 0.6734 as from resistance followed by a breakdown of 0.6700 may become a signal for new sales with the target at 0.6635. Stop-loss — 0.6734.

Implementation time: 2-3 days.