NZD/USD – Retail Sales push price for potential bullish breakout

Kiwi Retail Sales volume grew by the most in six years, propelling NZD/USD to 17-month high. This better than expected print continues the bullish surprises we’ve seen yesterday, with Business NZ PMI showing a stupendous 55.2 and ANZ Consumer confidence coming in at 121 strong. Number of houses sold has also increased dramatically by 21.1% in Jan 2013, with more credit card spending by consumers during the same period as well. Perhaps at this juncture, an apology to RBNZ’s Wheeler is needed. Traders and analysts alike were skeptical of his bullish outlook for 2013, which appeared unreal as many Central Banks/ Governments, not least New Zealand’s neighbor RBA, were downgrading their 2013 forecasts.

With all these new information given to us, it seems that a rosy 2013 picture for New Zealand is becoming more likely, affirming RBNZ’s hawkish stance.

Hourly Chart

NZD/USD managed to respect channel bottom thanks to the Retail Sales figures. Prices were looking precariously bearish with 0.848 failing to provide sufficient support, and price managed to peek just below the Channel before the better than expected economic news saved the day. Bulls should be wary of this short-term new development as it suggest that price may be overly extended on yesterday’s news. Without today’s revelation, we could be staring at a bearish reversal now with 0.848 ceiling holding. As it is currently, price has faltered just under the Channel Top and with Stochastic indicator giving us a bearish signal, there remain a possibility that price may still move back lower and retest Channel Bottom/0.848 before the week has ended.

Weekly Chart

From the weekly perspective, price has broke 0.848, but bullish breakout is not yet a forgone conclusion. Looking at Sep 2011, price attempted to break the same level and managed to  hit 0.857 before falling back, and eventually forming a bearish reversal Evening Star pattern. The same could still yet happen in this case, though bulls may press on further should this week price close above the resistance line, something that has not been managed since Aug 2011.

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