Tim Riddell, Research Analyst at Westpac, explains that daily momentum risks divergence as NZD spikes higher, a warning of a possible top if NZD fails to push through 0.7375 and near term pullbacks are critical.
Key Quotes
“If dips manage to hold above 0.7265, the uptrend can be sustained for a push towards 0.7485, but, as noted, risks or retracements are now high”
“Weekly
- Weekly indicators are also high but remain supportive as 0.7325-75 is tested. A spike towards 0.7485 could still develop, despite bias for deep corrections
- Even if NZD spikes to 0.7485, it would be seen as part of a broad consolidation. Consequently, a weekly close below 0.7265 could see range trading resume”
“Monthly
- Monthly indicators may be neutral but as with AUD, upside surprises (if 0.7485 fails to cap rebounds) are possible on the basis of higher corrections/retracements
- Monthly patterns still suggest that a broad consolidation is in place and that a return to broad range trading and tests of support are likely during 2H’17”
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