FX Play of the Day: NZD/CHF Aiming for Triangle Support Ahead of RBNZ

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Don’t look now, but NZD/CHF looks ready to test the bottom of its triangle chart pattern!

Do you think it will hold during the RBNZ decision?

As you can see from the hourly time frame below, the pair is closing in on the support area ahead of the big event.

NZD/CHF 1-hour Forex Chart

NZD/CHF 1-hour Forex Chart by TV

This pair has formed lower highs and found support around the .5450 minor psychological mark, creating a descending triangle pattern that’s been holding since late June.

Price just bounced off the resistance earlier this month and looks prime for a test of support again, but will it hold this time?

The RBNZ has its much-anticipated policy decision coming up, and the odds are in favor of a tightening pause this time. After all, New Zealand has entered a technical recession, and inflation seems to be winding down.

Then again, this likely outcome has been priced in for quite some time, so we might be in for a “buy the rumor, sell the news” reaction to the actual event.

Besides, there’s also the possibility of a “hawkish pause” wherein policymakers might keep the door open for future interest rate hikes if the economic situation calls for it.

If that’s the case, NZD/CHF could still bounce off its triangle bottom which is close to S1 (.5470) then bounce back up to the top near the pivot point (.5530).

The 100 SMA is above the 200 SMA to reflect bullish pressure for now, but the moving averages seem to be oscillating due to rangebound action.

Meanwhile, Stochastic is also on middle ground to reflect sideways movement, barely offering strong directional clues at the moment.

If Kiwi bears stay in the game, a move below S2 (.5420) could be enough to dash hopes of a bullish trend for NZD/CHF. On the other hand, a rally past the .5550 minor psychological mark or R1 (.5570) could hint that a rally of the same height as the triangle (200 pips) is in the works.

Just take note of the average NZD/CHF daily volatility of 42.5 pips when trading this one!

This content is strictly for informational purposes only and does not constitute as investment advice. Trading any financial market involves risk. Please read our Risk Disclosure to make sure you understand the risks involved.


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About the Author: Webbey Team

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