The New Zealand dollar (NZD) begins the week at 0.6116, with minimal change. However, last week witnessed a significant 2% dip, causing the NZD to hit a five-week low. The economic landscape in New Zealand remains challenging, as evidenced by the Performance of Services Index (PSI). The PSI report indicates three contractions in the second half of 2023. Although November saw a slight improvement with a marginal increase in the index to 51.2 from October’s 49.2, it still reflects sluggish growth. Investors eagerly await the report for December, hoping for insights into the future performance of the NZD.
Analyzing the hourly timeframe, we observe that GBPNZD is approaching a key area of supply. This supply zone aligns with the one identified on the daily timeframe, adding further confluence. Additionally, a potential head-and-shoulders pattern is currently forming on the hourly chart. Taking these factors into account, a bearish sentiment emerges, with the 100-period moving average as the target. Analysts predict a bearish direction with a target at 2.08241, while any price movement above 2.09687 would invalidate this expectation.
On the daily timeframe, NZDCAD rebounds off the demand zone, breaking above the previous high and forming a new one. This shift in trend suggests the high probability of price creating a higher low soon, especially considering the Fibonacci retracement levels. This bullish sentiment leads to a target of 0.82459, with the 76% Fibonacci level serving as the entry point. A move below 0.81749 would invalidate this outlook.
The direction for NZDUSD remains uncertain based on the current trading strategy. Therefore, it is prudent to closely monitor the price action until the trendline, which overlaps the 50 and 100 moving averages, is broken. This cautious approach aims to avoid aggressive entries and ensure a safer trading environment. Moreover, given the proximity to the demand zone on the daily timeframe, there is a possibility of a bullish reversal. Analysts anticipate a bullish direction with a target set at 0.61720. However, any movement below 0.60621 would invalidate this expectation.
Trading CFDs entails risks, and proper risk management is crucial for success. When pursuing these opportunities, it is essential to conduct thorough research and manage risk effectively to avoid costly mistakes. The volatility and uncertainties faced by the New Zealand dollar underline the importance of staying informed and adapting strategies to mitigate potential risks. By carefully analyzing market trends and indicators, traders can make more informed decisions and optimize their chances of success while trading the NZD.
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