NZDUSD Unable To Break Ichimoku – Post FOMC Trading Strategy

NZDUSD Unable to Break Ichimoku

Two weeks ago I called out on NZDUSD as it was unable to break Ichimoku. Now that the Fed raised interest rates, we are right back where we were, with a brand-new IDDA approach to strategy development. Let's get the pips on, baby!

Technical Analysis | NZDUSD Unable to Break Ichimoku

Daily Chart: The NZD/USD pair was unable to break above the daily Ichimoku cloud and is moving back towards our original support at 50% Fibonacci level at 0.6850. Not only that, it also formed a massive bearish engulfing by the end of Wednesday trading. 

The prevailing cloud is acting as a tough resistance for the pair together with the 23% Fibonacci retracement level. The Chiko span is also below the cloud and 38% Fibo is our new support.

(Click on image to enlarge)

 NZDUSD Unable to Break Ichimoku Cloud - Daily Chart Technical Analysis

Monthly Chart: The pair remains below the thick monthly  Ichimoku cloud as well, with the prevailing cloud turning down. As mentioned in our previous update, if this sentiment continues, the one-year-long uptrend could turn out to be a mere correction in the course of the ultra long-term saucer-top cycle which started back in 2009.

(Click on image to enlarge)

 NZDUSD Unable to Break Ichimoku Cloud - Monthly Chart Technical Analysis

Fundamentals | Fed Surprise

The Federal Reserve raised rates for the second time in 10 years on Wednesday, boosting their short-term interest rate target by a quarter point to 0.50 to 0.75 percent. It then surprised the markets by forecasting three rate hikes next year, and that it could need to do more. On the news we saw major USD strength across the board. NZD/USD was obviously not an exception. 

On the other hand, in a news conference following the rate decision, Fed Chair Janet Yellen said Donald Trump's election had put the central bank under a "cloud of uncertainty" (not to be confused with Ichimoku cloud) and already prompted some policymakers to shift their view of what's to come.

Now the question is if our gal pal Janet Yellen will get on Trump's team and start seeing eye-to-eye with him.

NZD Side: Value of All Buildings s.a. (QoQ) (3Q) came in worse than expected first thing during Thursday's Asian session. Even though this is a very low impact event, still, didn't help poor Mr. Kiwi as it dances versus the giggly Ms. USA

Market Sentiment | NZDUSD Unable to Break Ichimoku

The bearish sentiment seems to continue as the pair broke below the hourly cloud early on Thursday. However, there is a chance we could see a correction overnight.

Trading Strategy |NZDUSD Unable to Break Ichimoku

Putting the technical, fundamental and sentimental points of the IDDA approach together, we could consider going for a medium to long-term trade.

Here are Invest Diva's calculations for important approximate levels to keep an eye on: