NZDUSD Surge Ahead; US Stock Market Rally Imminent

04.02.2015

NZDUSD Surge Ahead; US Stock Market Rally Imminent

Forex

NZDUSD

NZDUSD Major Retracement | Pullback to .7600 Resistance

The surge in risk appetite in Tuesday’s trading sessions led to sharp corrections among most dollar pairs, as traders booked profits off their long dollar trades. NZDUSD found support at the .7200 major psychological level and looks prime for a retracement to the Fib levels marked on its 1-hour time frame.

A shallow retracement might lead to a test of the 38.2% Fibonacci level and a return to the previous lows while a larger pullback could last until the .7600 former support level and 61.8% Fib. This might serve as the line in the sand for any rallies, as a move past this point might mean that a reversal is in order.

The path of least resistance is to the downside since the RBNZ is staying open to rate cuts while the FOMC has expressed a hawkish bias in their policy statement. Data from the US economy could support this outlook, as the upcoming NFP release might show another strong pickup in hiring.

Bear in mind, however, that New Zealand just printed a strong employment report as the economy added 1.2% jobs for the previous quarter. The jobless rate climbed from 5.4% to 5.7% as the participation rate improved and drew more people to the jobs market.

GBPUSD

GBPUSD Triangle Breakout | Potential Gains to 1.5250

After trading for weeks inside a descending triangle chart pattern on its 1-hour time frame, GBPUSD made a strong breakout to the upside when risk appetite returned to the financial markets yesterday. Price bounced off support at the 1.5000 major psychological handle and rallied up to the 1.5200 major psychological resistance.

Data from the UK has been stronger than expected, as the construction PMI indicated a pickup in activity. The services PMI is up for release today and another improvement is eyed, which might be enough to sustain the pair’s gains until the 1.5250 minor psychological resistance or higher.

On the other hand, weak data could force the pair to return its recent gains and possibly move back to support at the 1.5000 major psychological level. A break below this area could mean that selling pressure remains very strong and that the pair is in for longer-term declines.

The path of least resistance is to the downside, as the BOE has shifted to a more dovish stance in their previous statement. Their upcoming statement should provide more clues on their policy bias, although traders might want to wait for the minutes of the meeting to be released.

Stocks

Double Bottom on Tesla Shares | Long-Term Reversal and Uptrend

Tesla shares appear to have bottomed out, as price made a double bottom chart pattern on its daily time frame. Price has yet to break past the neckline of the formation and a few key resistance levels before confirming the potential reversal and uptrend.

A move past the $230/share level could indicate that the downtrend is over, as this would place the price past the 50 simple moving average on its daily chart. Take note though that this short-term SMA just crossed below the longer-term 200 SMA, indicating that selling pressure is building up.

MACD is climbing, which means that buyers are still in control of price action for now and that a test of the neckline is possible. RSI is also moving up but is almost in the overbought area, which means that profit-taking might take place at a resistance level soon.

Profits for the company have been on the decline as falling oil prices have lowered the demand for alternative fuel and electronic cars. However, once the industry normalizes, a rebound in Tesla shares is expected as the company’s fundamentals might improve later on.