March 04, 2019Market review and metrics for Forex, Oil, S&P500 & Yields.

Pivot points, Support, Resistance & Fibonacci Reversal levels; Chart of Interest – <NZDUSD>. {updated 5PM EST }

FX Performance (Strongest to Weakest)
Strongest Weakest
Best Performer Worst Performer
  • Market performance (DAILY)

    Market Performance (click to enlarge)

Market Comments
Forex Antipodeans (NZD, AUD) were the strongest performers while the common currency lagged the rest of the majors. A positive outcome to the trade dispute between the worlds’ two largest economies should create a risk-on environment that would benefit the New Zealand and Australian currencies. That said, today’s trading activity felt more like a pause while the rumored event either came to pass or was rejected again. A fairly busy economic calendar awaits traders as RBA, BOC, ECB are slated to announce their respective monetary policy decisions on Monday, Wednesday and Thursday respectively. Friday will see the release of unemployment data from Canada and the US.

Cautious optimism about a mutually satisfactory US-China trade deal saw S&P500 rally last week and a test of resistance zone (2800-20) was in the offing as the trading week commenced. The market did not disappoint as the index hit a high just above 2819 in overnight trading activity. But a reversal ensued as the NY session got into full swing. The reason being bandied about was the release of the weaker than expected construction spending report for December, which showed a decrease of 0.6% -vs- market consensus of -0.3%. What’s more likely is that this report, a second tier data stream in terms of importance, was likely an excuse to sell an overbought market. After all how can a level be termed as major resistance if it can be pierced with very little effort. Additionally, the reality that comments about impending trade deals have to be viewed with a great deal of skepticism in the current alternate-fact environment and the launch of a thorough investigation by the Democratic controlled House of Representatives into ALL activity Trump related probably was more than enough to spook investors to take some money off the table.

Oil & Yields

Crude oil price rebounded though it did not reverse Friday’s down move. Again the possibility of US-China trade deal is being touted as the reason for the move.  Either way, a clear break of either $58 on the topside or $55 on the downside will be needed to pave the way for the next meaningful move.

  • Chart of Interest – NZDUSD (Daily)
    If, and it’s a BIG if, the US-China trade dispute is indeed resolved then Kiwi appears poised to appreciate -vs- the US Dollar given the relative certainty that market has vis-a-vis the RBNZ’s monetary policy as opposed to the FOMC’s. Currently the pair is carving out a triangle pattern within a larger triangle. Triangles can be either continuation or reversal patterns. The recent triangle should be viewed as a continuation that reflects the uncertainty brought on by the trade dispute. The larger one could be a reversal pattern that, if it comes to fruition, would validate the monetary policy difference that serves as a premise for NZD to outperform USD. A successful breach of either the dynamic resistance or support lines that bound the formations could see potential test of key resistance and support levels. Resistance comes in at 0.6900, 0.6940, 0.6970 while support can be found at 0.6720, 0.6580, and 0.6450.

    (click to enlarge)

  • Pivot Points & Fibonacci Retracement Levels
    A technical analysis indicator used to try and determine the short-term trend of the market. The pivot point is the average of the high, low and closing prices from the previous trading period. If the market on the following period trades above the pivot point it is thought to be exhibiting bullish sentiment, whereas trading below the pivot point is seen as bearish. The Fibonacci retracement is the potential reversal of a financial instrument’s original move in price.

    Market Metrics (click to enlarge)