NZDHKD dominated by bears dragging the market lower throughout the day
New Zealand Dollar/Hong Kong Dollar (NZDHKD) Technical Analysis Report for Jul 31, 2020 | by Techniquant Editorial Team
NZDHKD ended the month 2.7% higher at 5.1381 after tanking 545 pips (-1.05%) today on high volume. This is the biggest single-day loss in over a month. The bears were in full control today, moving the market lower throughout the whole session. Closing within the previous day's range, prices missed to decisively move beyond the prior day's trading range.
Daily Candlestick Chart (NZDHKD as at Jul 31, 2020):
Friday's trading range has been 715 pips (1.38%), that's far above the last trading month's daily average range of 442 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 NZDHKD.
In spite of a strong opening the FX pair closed below the previous day's open and close, forming a bearish Engulfing Candle. Additionally, one bearish candlestick pattern matches today's price action, the Black Candle.
Prices are trading close to the key technical support level at 5.1033 (S1). Prices broke below the key technical support level at 5.1858 (now R1), which is likely to act as resistance going forward. After having been unable to move lower than 5.1306 in the prior session, NZD/HKD found buyers again around the same price level today at 5.1332. The last time this happened on Wednesday, NZDHKD gained 0.46% on the following trading day.
The trend is clearly bullish, showing an intact uptrend in the short, medium and long-term.
Selling might speed up should prices move below the close-by swing low at 5.1306 where further sell stops could get triggered.
Among the 10 market conditions that our pattern recognition engine identified today, the statistics for the Price Action based market condition "Strong Down Move" stand out. Though it is usually interpreted as bearish, it has actually shown to be bullish for NZD/HKD. Out of 227 times, NZDHKD closed higher 50.66% 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 three trading days, showing a win rate of 53.74% with an average market move of 0.08%.
With five out of the seven Major FX Pairs closing lower today, the ones that stand out on the negative side are NZDUSD losing -1.04% and AUDUSD closing -0.72% lower. On the flipside the best performers have been USDJPY closing 1.12% higher and USDCHF gaining 0.48%. Looking at the other Minor FX Pairs and Crosses, the winners of the day have been USDZAR surging 1.87% and GBPZAR closing 1.79% higher. The worst performers of the day have been NZDCAD tanking -1.15% and EURTRY closing -0.96% lower. Read more