FxWirePro: Square-off synthetic put on NZD/USD as downtrend to resume

In order to participate in continuous downtrend, at the money call that replicated synthetic put was deployed on 22nd. The ATM protective call at that juncture served as a hedging strategy whereby the trader, who has an existing short position in NZDUSD (see daily charts, the pair rallied from the lows of 0.6236 on 23rd to the highs of 0.6373 yesterday), those call options placed to guard against these rise in the prices.

We undoubtedly foresee long term trend has been bearish as this pair has been unable to hold onto 6 year's lows due to various fundamental reasons. The dubious eye on USD has been worrisome as the rate hike decision has been deferred but Yellen in her speech last night has signaled rate hike is pretty much on the table which could prop up dollar's strength. Thus, in order to participate in continuous downtrend, square off above positions (protective calls if any) should be squared off and book the profits.

Technical Roundup: We already stated in our previous posts, on weekly charts, the pair has been tumbling non-stop from the peaks in last April at 0.7736 levels to evidence the huge loses. The pair currently held strong supports at 0.6200 levels from one and half months.

You can observe on the monthly charts for the historical evidence as to how the pair has behaved whenever RSI and stochastic curves have simultaneously reached oversold zone. Kiwi dollar after continues losing streak that has begun from mid April, it is now making an attempt of recovery a bit as both RSI and stochastic oscillators signaling buying sentiments in oversold zone.