Trend Line Re-Tests on Kiwi and Copper. Why?

May 11, 2016

Image: Pexels

Trend Line Re-Tests on Kiwi and Copper. Why?:
The big morning mover has been the Kiwi/Dollar, printing a huge bullish hourly candle before giving back some knee-jerk gains as sanity around this morning’s Financial Stability Report takes hold.

The report’s core discusses the notion that the financial system in New Zealand is healthy, but low dairy prices and house prices remain key risks.

“Imbalances in the housing market are increasing with house price inflation lifting again in Auckland, after cooling in late 2015 and early 2016 following new restrictions in investor loan-to-value ratios and government measures introduced in October.”

“Prices had also started increasing strongly in a a number of regions, though outside Auckland prices were generally lower relative to incomes.”

NZD/USD 4 Hour:
160511_NZDUSD_4hour
Click on chart to see a larger view.

Taking a look at the Kiwi 4 hour chart, the rally suggests that the market is interpreting the highlighting of housing market inflation risk as a sign that the RBNZ could be having second thoughts around further near term interest rate cuts.

The rally was however right into 4 hour resistance, re-testing the major daily channel we have been watching and trading around on the @VantageFX Twitter account over the last few months.

It could also be argued however, that while they have identified the risk, the lack of concrete measures to tackle the issue could have cleared the path.

Ah, isn’t central bank rhetoric great!

NZD/USD Daily:
160511_NZDUSD_daily
Click on chart to see a larger view.

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Chart of the Day:
Commodities traders have benefited from some reversals at key technical areas, shown beautifully on the Copper chart below.

Copper Daily:
160511_copper_daily
Click on chart to see a larger view.

Without zooming too far out, I can’t show where the Copper trend line starts on the above screenshot. But as with all trend lines, if you open up the Copper chart on your MT4 charts then you can easily find the most obvious low to draw your own line up.

The important level is marked on the above chart with a re-test and rejection past the initial break-out low.

With recent USD strength as well as continued contractions in the Chinese economy negating demand for commodities further, key resistance has held across the commodities trading sphere.

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On the Calendar Wednesday:
NZD RBNZ Financial Stability Report
NZD RBNZ Gov Wheeler Speaks
NZD RBNZ Gov Wheeler Speaks

GBP Manufacturing Production m/m

USD Crude Oil Inventories

Do you see opportunity trading Forex and Commodities with Vantage FX? Take advantage on your own instant $50,000 Forex demo account.

Dane Williams – @VantageFX

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