NZDUSD plummets, losing 70 pips (-1.04%) within a single day on high volume
New Zealand Dollar/US Dollar (NZDUSD) Technical Analysis Report for Jul 31, 2020 | by Techniquant Editorial Team
NZDUSD finished the month 2.71% higher at 0.6630 after tanking 70 pips (-1.04%) 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 failed to decisively move beyond the prior day's trading range.
Daily Candlestick Chart (NZDUSD as at Jul 31, 2020):
Friday's trading range has been 93 pips (1.39%), that's far above the last trading month's daily average range of 57 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 NZDUSD.
Regardless of a strong opening the 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 broke below the key technical support level at 0.6690 (now R1), which is likely to act as resistance going forward. After having been unable to move lower than 0.6620 in the prior session, NZD/USD found buyers again around the same price level today at 0.6623. The last time this happened on Wednesday, NZDUSD 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 0.6620 where further sell stops could get activated. With prices trading close to this year's high at 0.6739, upside momentum might accelerate should the Kiwi be able to break out to new highs for the year.
Among the 10 market conditions that our pattern recognition engine identified today, the statistics for the OHLC Patterns based market condition "Bearish Engulfing Candle" stand out. Its common bearish interpretation has been confirmed for NZD/USD. Out of 120 times, NZDUSD closed lower 50.00% 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 57.50% with an average market move of -0.25%.
With four out of the other six Major FX Pairs closing lower today, the ones that stand out on the negative side are AUDUSD losing -0.72% and EURUSD closing -0.58% lower. On the flipside the best performers have been USDJPY closing 1.12% higher and USDCHF gaining 0.48%. Looking at the 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 NZDHKD closing -1.05% lower. Read more