The Reserve Bank of New Zealand (RBNZ) held its official cash rate at 3.50%. It has been holding the key interest rate here for the 5th time, with some thinking it will be holding for at least a year longer. (stuff.co.nz) While the statement was essentially the same as its previous statements, some economists such as Westpac Bank chief economist Dominick Stephens believe that the tone is slightly dovish. Indeed, the RBNZ’s stance may have shifted from waiting to raise rates, to being neutral and open to cut rates if needed.
The AUD/NZD has been rallying after making a record low at 1.0353 earlier in the month.
The 4H chart shows a market that is shifting into a bullish trend. After a price bottom formed,
– price has been making higher highs and higher lows.
– The moving averages have shifted to slope up and are in bullish alignment.
– Price is trading above the moving averages and respecting rising trendlines.
– The 4H RSI has tagged 70 and held above 40, reflecting the development of bullish momentum.
Price action retreated from 1.0757and was trading sideways this week ahead of the RBNZ. We can see that the reaction is a continuation of the prevailing uptrend in this time-frame as price is breaking above 1.0758 to test the 1.08 handle.
The current uptrend is going against a prevailing downtrend at the end of 2014 from 1.1304 to 1.0353. Looking at the daily chart, we can see key resistance in the 1.09-1.0940 area. This contains the 61.8% retraement (1.0940), and the lows during the multi-month consolidation between August and mid-November. In the daily chart, the AUD/NZD is neither bullish nor bearish, so here at 1.09-1.0940, if the daily RSI is around 70, or better yet around 70 and with bearish divergence, we should expect a bearish attempt back towards the 1.06-1.0650 area.
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