NZD/CHF Price Analysis: RBNZ to kick bears into gear or deny them a free lunch?

  • RBNZ in focus and hawkish fundamentals may clash with bearish technical bias. 
  • NZD/CHF bears seeking a downside extension on anything regarded as in line with the status quo at central banks.

The focus is on the bird for the forthcoming hours ahead of today’s Reserve Bank of New Zealand's Monetary Policy Statement that takes centre stage.

''...we expect the RBNZ to play it with a straight bat, echoing their earlier caution and that of other central banks. All else equal, given hikes priced in, that speaks to the risk of a mild moderation in the NZD,'' analysts at ANZ Bank explained. 

This could play out well for the bearish thesis in NZD/CHF so long that there is not too much of a blowoff in the bird that would erode a favourable risk to reward ratio in targeting lower lows.

If NZD/CHF sinks too far on the knee jerk, to see near to or equal daily lows, then it would be too risky at that juncture to aim for a lower low by selling at the lows. 

A Goldilocks scenario would be for a relatively benign outcome that translates into no more than a move within the ranges of the 4-hour ATR to the downside. 

In such a case, the bears will be looking for a set-up from an optimal entry point with favourable risk to reward.

Ideally, bears will be entering well above recent daily lows seeking to target a break of such support structure from as high up as possible and from below bearish structure as follows:

Daily chart

4-hour chart

Note, this trade plan is only valid if the RBNZ does not cause a drop that closes in the invalidation zone on a 4-hour closing basis; If the price is supported there, then it is too risky to be selling near the demand area.

It is never wise to be trading around such high profile events, but the technical market structure is bearish and there is a high probability of a downside continuation outside of a strong knee jerk reaction on a hawkish outcome. 

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