Higher Dairy Prices Bullish For NZD/USD

Higher dairy prices bullish for NZD/USD

Global Dairy Trade Price Index rose 2.2% at January 2 auction. Will the NZD/USD continue rising?

The NZD/USD: D1has been correcting upward since hitting 18-month low in the end of November on the daily chart. The gap between the 200-day moving average MA(200) and the 50-day moving average MA(50) is narrowing which is a bullish signal.

  • The Parabolic indicator gives a buy signal.
  • The Donchian channel indicates no trend yet: it is flat.
  • The MACD indicator is bullish: it is above the signal line and the gap is widening.
  • The stochastic oscillator is falling but has not reached the oversold zone.

We believe the bullish momentum will continue after the price closes above the upper Donchian boundary at 0.7228. A pending order to buy can be placed above that level. The stop loss can be placed below the lower Donchian boundary at 0.7002. After placing the order, the stop loss is to be moved every day to the next fractal low, following Parabolic signals. Thus, we are changing the probable profit/loss ratio to the breakeven point. The most risk-averse traders may switch to the 4-hour chart after the trade and place there a stop-loss moving it in the direction of the trade. If the price meets the stop loss level ($0.7002) without reaching the order ($0.7228), we recommend canceling the order: the market sustains internal changes which were not taken into account.

Summary of technical analysis

Position: BuyBuy stop: Above 0.7228Stop loss: Below 0.7002

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