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NZD/USD statistical and technical analysis

The current price of the NZD/USD exchange rate is 0.6970 (July 27, 2021). This pair is currently trading at an important level. The New Zealand dollar is highly correlated with commodities and the strengthening of the USD is usually much higher if commodity prices fall. Let’s look at statistical and technical analyzes.

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 0.37% , well below the first standard deviation. Our scoring is currently neutral (0 ) for the month-on-month change and 1 for price indexation. This means that we are in a slightly positive phase of the cycle. Both scorings range from -3 up to 3 . The development of the estimated cycles based on our analytical systems is shown in the following chart.

NZD/USD daily price indexation 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. According to all MAs, NZD/USD is in bearish sentiment because it is below them. In the case of growth, monthly and annual MAs, which are very close to each other, could be the first important resistance for the exchange rate

NZD/USD daily price development Source: WALFIR

There have been longer upward trends since our last analysis, with a maximum of 4 consecutive days. The maximum in the measured period is 6 days. Downward trends did not exceed more than 3 days in the same period. The maximum in the measured period is 8 days. We could use the average long-term ATR (Average True Range) obtained from daily data (0.97% ) to estimate Stop Loss orders for our positions. The current value is 0.90% , which is very close to the average. 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 daily low to high distribution Source: WALFIR

The basic technical analysis points to bearish sentiment since the beginning of this year. This pair has been declining dynamically since our last analysis. However, it has been in the stabilization phase for the last few weeks. We can also clearly see the bullish divergence between the market price and the RSI, which moved the pair back to the demand zone (green rectangle), where are also the Fibonacci retracement level of 23.60% and the important psychological level of 0.7000 . Therefore, a possible bear trap was created. In the case of growth, the long-term moving average, together with short-term MA could be strong resistance to 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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