NZD/USD: Risk of topping before deep retracements in 2H’17 – Westpac

Daily momentum is turning and warns that a top is imminent but gains since mid-May were strong, so pullbacks may be limited to the 0.7070-0.7130 retracement area, according to Tim Riddell, Research Analyst at Westpac.

Key Quotes

“Although corrections are contained so far, broader patterns highlight the risk of deeper range redefining declines. Rebounds above 0.7270 would reduce this risk.”

“Weekly

• The uptrend in weekly indicators remains in place and so risk of a spike above 0.7325 to complete this uptrend should not be ignored, despite bias for corrections
• However, longer term patterns are still consistent with a large consolidation. Any acceleration through 0.7070 could trigger a flush to retest the 0.6715-0.6860 area”

“Monthly

• Monthly indicators remain at neutral levels. Deep range defining slippage may have been avoided into June, but remains a clear and present risk for 2H’17
• Monthly patterns still suggest that such deep retracements would act to redefine consolidation support within a broad 0.6500-0.7300 range”