NZDUSD closes within prior day's range after lackluster session
New Zealand Dollar/US Dollar (NZDUSD) Technical Analysis Report for Aug 04, 2020 | by Techniquant Editorial Team
NZDUSD ended Tuesday at 0.6622 gaining 10 pips (0.15%) on low volume. Trading up to 18 pips lower after the open, the Kiwi managed to reverse during the session as bulls took control ending the day above its opening price. The last time this happened on July 30th, NZDUSD actually lost -1.04% on the following trading day. Closing within the previous day's range, prices missed to decisively move beyond the prior day's trading range in a lackluster session.
Daily Candlestick Chart (NZDUSD as at Aug 04, 2020):
Tuesday's trading range has been 38 pips (0.58%), that's far below 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 above the market's average weekly trading range. The longer-term, monthly volatility is currently slightly lower than usual for NZDUSD.
During the whole day, prices traded within the previous day's range, unable to trade above the prior day's high or below the previous day's low forming an Inside Bar.
Prices are trading close to the key technical support level at 0.6585 (S1).
Although the pair is currently in a short-term downtrend, this could just be a correction, as both the medium and long-term trends are still bullish.
Selling might accelerate should prices move below the nearby swing low at 0.6575 where further sell stops could get triggered. With prices trading close to this year's high at 0.6739, upside momentum might speed up should the market be able to break out to new highs for the year.
Among the four market conditions that our pattern recognition engine identified today, the statistics for the Price Action based market condition "Bullish Intraday Reversal" stand out. Though it is usually interpreted as bullish, it has actually shown to be bearish for NZD/USD. Out of 419 times, NZDUSD closed lower 50.84% 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 50.36% with an average market move of -0.01%.
With four out of the other six Major FX Pairs closing lower today, the ones that stand out on the negative side are USDCAD losing -0.55% and USDCHF closing -0.49% lower. On the flipside the best performers have been AUDUSD closing 0.53% higher and EURUSD gaining 0.35%. Looking at the Minor FX Pairs and Crosses, the winners of the day have been CHFZAR surging 1.54% and EURZAR closing 1.39% higher. The worst performers of the day have been ZARJPY tanking -1.14% and USDCZK closing -0.92% lower. Read more