ew Zealand dollar strengthens on positive economic data
The New Zealand dollar is rising since mid-May, and widening trade surplus in April was the last piece of positive news among recent economic data. Will the New Zealand dollar continue strengthening?
The NZDUSD: D1 has been correcting upward since hitting 12-month low in the beginning of May. The price has approached the 200-day moving average MA(200) on the daily chart.
- Parabolic indicator gives a buy signal.
- The Donchian channel indicates no trend yet: it is flat.
- The MACD indicator is above the signal line and the gap is rising, which is bullish.
- The stochastic oscillator is in the overbought zone and falling, which is a bearish signal.
We believe the bullish momentum will continue after the price closes above the MA(200) and upper Donchian boundary at 0.7046. A pending order to buy can be placed above that level. The stop loss can be placed below the Parabolic signal at 0.6843. After placing the order, the stop loss is to be moved every day to the next fractal low, following Parabolic signals. Thus, we are changing the probable profit/loss ratio to the breakeven point. The most risk-averse traders may switch to the 4-hour chart after the trade and place there a stop-loss moving it in the direction of the trade. If the price meets the stop loss level ($0.6843) without reaching the order ($0. 7046), we recommend canceling the position: the market sustains internal changes which were not taken into account.
Summary of technical analysis:
| Position | Buy |
| Buy stop | Above 0.7046 |
| Stop loss | Below 0.6843 |