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NZD/USD Technical Analysis - NZD/USD Trading: 2018-01-11
Higher dairy prices bullish for NZDUSD
Global Dairy Trade Price Index rose 2.2% at January 2 auction. Will the NZDUSD continue rising?
Dairy sector remains New Zealand’s biggest export earner accounting for 23.7% of total exports. Exports from New Zealand increased by 19.6% year over year to 4,629 NZD Million in November of 2017. Export growth was mainly due to solid increases in the three main commodities: milk powder, butter & cheese, up 21.7% after 21.9% increase in October. Higher Global Dairy Trade Price Index, which reflects the weighted average price of 9 dairy products sold at auction every 2 weeks, indicates increased demand for New Zealand dairy exports. Higher export demand is bullish for New Zealand’s currency.
The NZDUSD: D1 has been correcting upward since hitting 18-month low in the end of November on the daily chart. The gap between the 200-day moving average MA(200) and the 50-day moving average MA(50) is narrowing which is a bullish signal.
- Parabolic indicator gives a buy signal.
- The Donchian channel indicates no trend yet: it is flat.
- The MACD indicator is bullish: it is above the signal line and the gap is widening.
- The stochastic oscillator is falling but has not reached the oversold zone.
We believe the bullish momentum will continue after the price closes above the upper Donchian boundary at 0.7228. A pending order to buy can be placed above that level. The stop loss can be placed below the lower Donchian boundary at 0.7002. 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 ($0.7002) without reaching the order ($0.7228), we recommend canceling the order: the market sustains internal changes which were not taken into account.
Technical Analysis Summary
| Position | Buy |
| Buy stop | Above 0.7228 |
| Stop loss | Below 0.7002 |
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