HKDNZD finds buyers at key support level
Hong Kong Dollar/New Zealand Dollar (HKDNZD) Technical Analysis Report for Jul 31, 2020 | by Techniquant Editorial Team
HKDNZD ended the month -2.65% lower at 0.1946 after surging 20 pips (1.04%) today on high volume. This is the biggest single-day gain in over a month. The bulls were in full control today, moving the market higher throughout the whole session. Closing within the previous day's range, prices failed to decisively move beyond the prior day's trading range.
Daily Candlestick Chart (HKDNZD as at Jul 31, 2020):
Friday's trading range has been 27 pips (1.4%), that's far above the last trading month's daily average range of 17 pips. Things look different on the weekly timeframe, where the market's trading range of the last week has been slightly below 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 0.1921 and 0.1950 where it has been caught now for the whole last trading week.
Despite a weak opening the market managed to close above the previous day's open and close, forming a bullish Engulfing Candle. Additionally, one bullish candlestick pattern matches today's price action, the White Candle.
After trading down to 0.1921 earlier during the day, the pair bounced off the key technical support level at 0.1925 (S1). The failure to close below the support could increase that levels significance as support going forward. Prices are trading close to the key technical resistance level at 0.1957 (R1). After having been unable to move above 0.1949 in the prior session, HKD/NZD ran into sellers again around the same price level today, missing to move higher than 0.1948. The last time this happened on Wednesday, HKDNZD lost -0.47% on the following trading day.
The trend is clearly bearish, showing an intact downtrend in the short, medium and long-term.
Buying might accelerate should prices move above the close-by swing high at 0.1949 where further buy stops could get activated.
Among the 10 market conditions that our pattern recognition engine identified today, the statistics for the Price Action based market condition "Close near high of period" stand out. Though it is usually interpreted as bullish, it has actually shown to be bearish for HKD/NZD. Out of 489 times, HKDNZD closed lower 53.17% 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 10 trading days, showing a win rate of 50.31% with an average market move of -0.11%.