HKDNZD stuck within tight trading range
Hong Kong Dollar/New Zealand Dollar (HKDNZD) Technical Analysis Report for May 22, 2020 | by Techniquant Editorial Team
Moving higher for the 2nd day in a row, HKDNZD finished the week -2.76% lower at 0.2114 after gaining 7 pips (0.33%) today on high volume. Closing above Thursday's high at 0.2113, HKD/NZD confirmed its breakout through the previous session high after trading up to 7 pips above it intraday.
Daily Candlestick Chart (HKDNZD as at May 22, 2020):
Friday's trading range has been 17 pips (0.81%), that's far below the last trading month's daily average range of 27 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 HKDNZD. Prices continued to consolidate within a tight trading range between 0.2095 and 0.2128 where it has been caught now for the last three trading days.
One bearish candlestick pattern matches today's price action, the Bearish Hikkake Pattern.
Unable to break through the key technical resistance level at 0.2118 (R1), the forex pair closed below it after spiking up to 0.2120 earlier during the day. The failure to close above the resistance might increase that levels significance going forward. When prices bounced off a significant resistance level the last time on May 7th, HKDNZD lost -0.80% on the following trading day.
The FX pair shows strength in the short-term supported by its long-term uptrend with only the medium-term trend being bearish.
Selling could speed up should prices move below the nearby swing low at 0.2095 where further sell stops might get triggered. Further selling could move prices lower should the market test April's close-by low at 0.2089.
Among the five market conditions that our pattern recognition engine identified today, the statistics for the OHLC Patterns based market condition "Bearish Hikkake Pattern" stand out. Its common bearish interpretation has been confirmed for HKD/NZD. Out of 83 times, HKDNZD closed lower 51.81% of the time on the next trading day after the market condition occurred. The optimal exit for swing trading this condition on the short side has been after nine trading days, showing a win rate of 53.01% with an average market move of -0.09%.