NZD/USD Break Below 0.7065 May Trigger a Bearish Move

NZD/USD – Technical Analysis for Australian Forex Trading & CFDs.

US ISM Non-Manufacturing PMI

Today, at GMT 4:00 p.m., the US based Institute for Supply Management (ISM) will release its monthly Non-Manufacturing PMI figure, which measures the level of a diffusion index created by surveying purchasing managers. However, the ISM’s PMI figure excludes the non-manufacturing sector.

Forex investors consider the ISM Non-Manufacturing PMI figure to be a leading economic indicator because purchasing managers have the most updated view of the economy.

Last month, the ISM’s PMI figure came out at 54.7 and the forecast for this month is currently set at a slightly improved figure, at 55.3.

New Zealand – GDT Price Index

Later in the day, the Global Dairy Trade will release the GDT price index, which measures the changes in the average price of dairy products sold at auction in New Zealand.

Since the bulk of New Zealand’s exports to the world market consists of dairy products, the GDT price index acts as a leading indicator of the country’s trade balance because the rising price of dairy products ensures that foreign buyers have to purchase it at a higher price. Therefore, the Forex traders use this data to predict future trade balance, which helps in the valuation of the New Zealand Dollar against other major currencies.

Last period, the GDT price index increased by 4.5% after increasing by 11.4% in the previous reporting period. If the trend continues, we would likely see the index go up once more this week.

Trade Recommendation for the NZD/USD

NZDUSD - Technical Analysis for Australian Forex Brokers - Dec 5, 2016

Since breaking below the 0.7315 level on November 9, 2016, the NZD/USD remained in a strong bearish trend that pushed the price towards the support level around 0.7000 level, which is a big round number, over the last few weeks.

However, soon after reaching near the 0.7000 level, the NZD/USD started a bullish retracement move and formed an uptrend line in the process. However, over the last week, the NZD/USD price has come down to test the support around the 0.7065 level and currently, it is trading below the uptrend line.

If the New Zealand’s GDT price index appear to slow down this week, it would likely have a bearish impact on the NZD/USD price, because the US non-manufacturing PMI is expected to go up a bit over the last month as well.

Under the circumstances, it would be recommended that Australian Forex traders consider placing a SELL order at market price for the NZD/USD with their Forex brokers as soon as the pair closes below the 0.7065 level on the daily time frame. A possible profit target for this trade would be around the 0.6950 level. On the other hand, Forex traders should consider placing a stop loss order above 0.7100.

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Asif worked as a prop trader for almost a decade, and later he managed trading operations for one of the largest foreign exchange strategy developers in Europe. Currently, he works as a trading consultant to several brokers and writes about various tech and financial topics. You can reach him at contact@asifimtiaz.com

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Asif Imtiaz

Asif worked as a prop trader for almost a decade, and later he managed trading operations for one of the largest foreign exchange strategy developers in Europe. Currently, he works as a trading consultant to several brokers and writes about various tech and financial topics. You can reach him at contact@asifimtiaz.com

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