NZD / SGD Technicals – Hitting Resistance after RBNZ

Hourly Chart

NZD rallied against all currencies after RBNZ held rates, with a surprisingly hawkish tone in the accompanying statement. NZD/SGD was no exception, with the rally helping 1.026 to hold against overnight selling off no thanks to “risk off” sentiments related to US GDP. Currently price is staying just under 1.036, with previous 2 attempts trying to cross the line resulted in heavy pull backs immediately (see 2 Gravestone Doji within the past 8 hours following the rally to 1.036). This is an indication that there are many offers around these prices. Though currently the resistance is still holding, the more times price attempt to break higher, the number of offers start to dwindle, eventually reaching a situation where bids outweigh offers to finally push price above 1.036. Follow-through on the break though, is another issue altogether, but bears should be concern if price continue to hit the resistance as it is threatening to do now. Hit anything long enough, it will eventually break.

Stochastic is less optimistic about the break, with readings firmly entrenched in the Overbought region. Even if price fails to push higher, 1.033 could still provide interim support against a move back to 1.026 (see consolidation area between 29th and 20th Jan)

Weekly Chart

Price looks to be trading sideways since April 2011, though a slight bullish bias is seen from the rally of 2012 lows to current 2013 high. Rising trendline has not been broken, and price has cleared significant resistance around 1.02. We are also trading above the previous swing high of Dec 2012, with 2011/2012 highs around 1.06 in sight.

Long term fundamentals suggest that NZD has space for growth, with RBNZ Governor Wheeler indicated NZ’s economy is picking up, despite labor and export woes that has been flooding newswires lately. Whether this is a true reflection of NZ’s economy, or just bullish rhetoric hoping to reinvigorate the market remains to be seen, though the next few months economic data form New Zealand will certainly have greater importance in NZD’s direction.

NZD/SGD is also reacting well to global economic news, as evident by the quick sell-off following US GDP. Traders who wish to play “risk-on” “risk-off” could use this as an alternative against regular “risk” currencies such as AUD/USD and EUR/USD if they do not wish to expose themselves to USD uncertainty.

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.