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NZD/USD statistical and technical analysis

The current price of the NZD/USD exchange rate is 0.7170 (April 20, 2021). This pair is currently trading close to an important level. The New Zealand dollar is highly correlated with commodities. Let’s look at statistical and technical analysis.

Based on a long-term analysis of historical data, the average positive and negative daily returns are approximately 0.58% and -0.60% , respectively. The estimated daily return in both directions based on their probability of occurrence is 0.30% and -0.29% . Yesterday´s return was 0.55% . Our scoring is currently neutral (0 ) for the month-on-month change and 2 for price indexation. This means that we are in the positive phase of the cycle. Both scorings range from -3 up to 3 . The estimated cycles development based on our analytical systems is shown in the following chart.

NZD/USD Price indexation and cycles Source: WALFIR

Different moving averages (MAs) help us better identify trends across multiple time frames. We use 3 basic MAs to find out which sentiment dominates each horizon. The purple line represents the monthly , the green line the 6 months and the yellow line the annual moving average. The NZD/USD has continued to rise in recent weeks. Therefore, as we can see in the chart below, all MAs still support bullish sentiment.

NZD/USD daily price development Source: WALFIR

Since the outbreak of the COVID-19 epidemic, there have been more upward trends. Last summer, a maximum of 6 consecutive days were reached. Downward trends did not exceed more than 5 days in the same period. The maximum in the measured period are 7 days. We could use the average ATR (Average True Range) obtained from daily data (1.16% ) to estimate Stop Loss orders for our positions. The current value is 0.97% . Approximately 90% confidence interval (return between -1.2% and 1.2% ) is shown in the histogram below by a red rectangle.

NZD/USD daily return distribution Source: WALFIR

We could use the last decile of low to high returns (2.00% ) to estimate Profit Targets, as shown in the chart below.

NZD/USD low to high distribution Source: WALFIR

Basic technical analysis still supports longer-term bullish sentiment, as the exchange rate creates higher lows and higher highs. This pair was in a short-term correction in March after extreme volumes occurred. However, we can clearly see a bullish divergence between the market price and the RSI, which helped the pair rise again. The NZD/USD is currently close to an important psychological level of 0.7200 , which could be a resistance for this pair. In the event of a decline, the longer-term moving average, the psychological level of 0.7000 and the Fibonacci retracement level of 23.60% could be a strong support for bulls.

NZD/USD basic technical analysis Source: TradingView

WALFIR Technologies is one of the three divisions of WALFIR s.r.o., which is based in Slovakia. The primary interests of this division are analytical, quantitative, and algorithmic...

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