USDNZD dominated by bulls lifting the market higher throughout the day
US Dollar/New Zealand Dollar (USDNZD) Technical Analysis Report for Jul 31, 2020 | by Techniquant Editorial Team
USDNZD finished the month -2.64% lower at 1.5083 after surging 158 pips (1.06%) 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 (USDNZD as at Jul 31, 2020):
Friday's trading range has been 209 pips (1.4%), that's far above the last trading month's daily average range of 130 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 USDNZD. Prices continued to consolidate within a tight trading range between 1.4890 and 1.5117 where it has been caught now for the whole last trading week.
Even with a weak opening USD/NZD 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.
Buyers managed to take out the key technical resistance level at 1.4948 (now S1), which is likely to act as support going forward. After having been unable to move above 1.5106 in the prior session, the FX pair ran into sellers again around the same price level today, missing to move higher than 1.5099. The last time this happened on Wednesday, USDNZD 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 could speed up should prices move above the close-by swing high at 1.5106 where further buy stops might get activated. With prices trading close to this year's low at 1.4839, downside momentum could accelerate should the forex pair break out to new lows for the year.
Among the 10 market conditions that our pattern recognition engine identified today, the statistics for the OHLC Patterns based market condition "Bullish Engulfing Candle" stand out. Its common bullish interpretation has been confirmed for USD/NZD. Out of 121 times, USDNZD closed higher 49.59% 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 10 trading days, showing a win rate of 57.02% with an average market move of 0.27%.