FxWirePro: Speculate NZD/USD via tunnel spreads as swings to restrain at stiff resistance, major trend likely surge for another 150-200 pips

China's trade surplus fell to USD 42.77 billion in June of 2017 from USD 45.16 billion a year earlier while market expected a USD 42.44 billion surplusChina in the recent past managed to produce an upbeat CAIXIN manufacturing PMIs, the data has outpaced the forecasts, actual 50.3 versus forecasts at 49.9 and the previous flash of 49.6. 

Since China has been the major trade partner of New Zealand and the Kiwis’ trade exposure towards China is considerable, we would like to shed some light on Chinese macroeconomic numbers.

On the back of this Chinese data, bulls of NZDUSD have tested the strong supports at 0.7263 levels to bounce back to the resistance of 0.7378 levels (refer daily charts).

Although there has been a lingering bullish sentiment in the short run, the ongoing rallies are unlikely to show Stern moves above 0.74 levels as the leading indicators (RSI and stochastic curves) signal shrinking momentum at this juncture.

Failure swings at the stiff resistance of 0.74, more slumps are expected upon bearish DMA crossover, otherwise rallies again likely to drag upto 0.74 (on daily charts).

The Relative Strength Index (RSI) technical indicator, which compares the magnitude of recent gains with the magnitude of recent losses, is used by chart watchers to gauge the momentum of a market trend. Bearish convergence is a warning to investors not to buy the dip in the panicky markets, instead, snap the rallies to build tunnel spread like structures.

Any break below 7DMA may attract the trend to slide towards next strong support at 0.7245 marks.

Most importantly watch for the day, if there is no momentum achieved from the current levels then we foresee most likely drag upto 7DMAs. And if you observe 7DMA crossing below 21DMA, then it would be deemed as a signal of weakness and resume downswings below 7DMAs again.

On the flip side, on monthly terms the bullish swings from last two and half months are gaining traction upto next stiff resistance levels of 0.74-75 levels on the intensified bullish momentum in the consolidation phase in major trend, rallies on this plotting are again restrained below stiff resistance of 0.74-75 levels.

To substantiate this stance, MACD has signaled the continuity in prevailing rallies but remains in the bearish territory (refer monthly charts).

While aggressive intraday speculators can bet on both further upswings upto next stiff resistance levels (maximum upto 0.74 levels) and thereafter dips seems to be likely.

Trade tips:

Contemplating above technical reasoning, at spot reference: 0.7325 levels, tunnel spreads are the best suitable, so snap the rallies to deploy higher strikes in the binary puts while shorting lower strikes simultaneously. Use upper strike at 0.74, lower strike at 0.7278 (i.e. 7DMA) levels which would mean that the speculative opportunity between 90-100 pips.

Currency Strength Index: FxWirePro's hourly NZD spot index is inching towards 41 levels (which is mildly bullish), while hourly USD spot index was at a tad below -14 (bearish) at the time of articulating at 05:49 GMT. For more details on the index, please refer below weblink:

http://www.fxwirepro.com/currencyindex.

FxWirePro launches Absolute Return Managed Program. For more details, visit: 

http://www.fxwirepro.com/invest