15 Jul 2014
NZD/USD: A retracement is close - JPMorgan
FXStreet (Bali) - According to JP Morgan FX Strategists, with the rally in NZD/USD extending into key medium term resistance, the short term setup suggests a retracement is close.
Key Quotes
"While the rally phase for NZD/USD from the June low stays resilient, the short term backdrop suggests a retracement is close. Importantly, the advance has extended into critical resistance levels highlighted by the .8780/.8845 zone. This area represents the May high and the cycle peak from 2011."
"Moreover, the current overbought and diverging momentum setup suggests this rally phase is mature and vulnerable to a retracement. Support enters at the .8767 trendline from the June low, while a violation of the .8713/.8662 zone (July and late-June lows and 38.2% retracement from June) should confirm the onset of a deeper short term corrective phase with potential to extend back to the .8570/.8500 zone (61.8-76.4% retracement zone from the June low)."
"Alternately, any extension through the .8845 area implies the deteriorating short term setup has yet to register with the price action. This should allow for a closer test of deeper short term targets in the .9000/.9100 zone."
"Still, the setup for the crosses is consistent with additional NZD outperformance highlighted by the setup for AUD/NZD. While we sense some pause is close, a closer test, if not eventual break of this year’s 1.0539/1.0493 lows (March/Jan) remains likely."
Key Quotes
"While the rally phase for NZD/USD from the June low stays resilient, the short term backdrop suggests a retracement is close. Importantly, the advance has extended into critical resistance levels highlighted by the .8780/.8845 zone. This area represents the May high and the cycle peak from 2011."
"Moreover, the current overbought and diverging momentum setup suggests this rally phase is mature and vulnerable to a retracement. Support enters at the .8767 trendline from the June low, while a violation of the .8713/.8662 zone (July and late-June lows and 38.2% retracement from June) should confirm the onset of a deeper short term corrective phase with potential to extend back to the .8570/.8500 zone (61.8-76.4% retracement zone from the June low)."
"Alternately, any extension through the .8845 area implies the deteriorating short term setup has yet to register with the price action. This should allow for a closer test of deeper short term targets in the .9000/.9100 zone."
"Still, the setup for the crosses is consistent with additional NZD outperformance highlighted by the setup for AUD/NZD. While we sense some pause is close, a closer test, if not eventual break of this year’s 1.0539/1.0493 lows (March/Jan) remains likely."