CHFNZD stuck within tight trading range
Swiss Franc/New Zealand Dollar (CHFNZD) Technical Analysis Report for May 22, 2020 | by Techniquant Editorial Team
CHFNZD ended the week -2.67% lower at 1.6883 after gaining 48 pips (0.29%) today. Closing within the prior day's range, prices failed to decisively move beyond the previous day's trading range in a lackluster session.
Daily Candlestick Chart (CHFNZD as at May 22, 2020):
Friday's trading range has been 119 pips (0.71%), that's below the last trading month's daily average range of 233 pips. Things look different on the weekly timeframe, where the market's trading range of the last week has been slightly above the market's average weekly trading range. The longer-term, monthly volatility is currently slightly lower than usual for CHFNZD. Prices continued to consolidate within a tight trading range between 1.6798 and 1.6987 where it has been caught now for the last three trading days.
During the whole day, prices traded within the prior day's range, unable to trade above the previous day's high or below the prior day's low forming an Inside Bar.
After trading down to 1.6807 earlier during the day, the market bounced off the key technical support level at 1.6835 (S1). The failure to close below the support could increase that levels significance as support going forward. When prices bounced off a significant support level the last time on Tuesday, CHFNZD actually lost -0.45% on the following trading day. After having been unable to move lower than 1.6798 in the previous session, CHF/NZD found buyers again around the same price level today at 1.6807.
The pair shows strength in the short-term supported by its long-term uptrend with only the medium-term trend being bearish.
Selling might speed up should prices move below the nearby swing low at 1.6798 where further sell stops could get activated. Trading close to March's low at 1.6513 we might see further downside momentum if potential sell stops at the level get triggered.
Among the four market conditions that our pattern recognition engine identified today, the statistics for the Support/Resistance based market condition "Bounced off Technical Support S1" stand out. Its common bullish interpretation has been confirmed for CHF/NZD. Out of 572 times, CHFNZD closed higher 52.80% of the time on the next trading day after the market condition occurred. The optimal exit for swing trading this condition on the long side has been after 10 trading days, showing a win rate of 50.17% with an average market move of 0.39%.