NZD/USD fundamental and technical analysis & trading plan | Oct 8, 2020 | Keon Consultancy

Fundamental bearish outlook

From news sources on Oct 8, 2020:

Reserve Bank of New Zealand (RBNZ) hints at its Funding for Lending Program (FLP), which may or may not be implemented with negative Official Cash Rate (OCR).

Monetary Policy Committee (MPC) believed such a program would make a negative OCR more effective.

Technical analysis

NZD/USD made a Double Top pattern. Then Daily/D1 candle of Sep 23 broke out of the Neckline. We waited for upward retracement, then downward continuation was confirmed by the Bearish Engulfing candle. Moreover, the pair started trading below the MACD predictor, which means that the Daily Trend turned bearish. If the pair returns to the upside and a D1/Daily candle will close above the high of Sep 23, we will exit.

After making the downswing that caused breakout of the Neckline on D1/Daily timeframe, NZD/USD retraced up and consolidated around 50% of the downswing, but couldn't break to upside. Then, it broke out of the up-trendline, which confirmed a sell signal. We have set another sell position as a pending/limit order if the price retraces up to Fib 61.8% level of the recent downswing.

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