Short covering persisted into Europe, after yesterday’s stronger than expected NZ retail sales data, squeezing the Kiwi up to a high of 0.8510 before it dipped back to 0.8480 and then traded near 0.8490 for the remainder of the session.In the absence of any major data today, I would expect a reasonably quiet session, fairly close to current levels, but the 4 hour charts remain positive and another test of the session highs should not be ruled out. Beyond there, 0.8535 (1 Aug high) will see sellers, above which the Kiwi could make a run towards 0.8586 (25 July high). Further out, it could be that the Kiwi wants to make a run back to 0.8615, where strong resistance lies in the shape of the daily cloud base/daily Kijun/100 DMA.
If the Kiwi fails here, the downside would head back towards support at the daily Tenkan/200 DMA at 0.8460/65. I don’t think we are heading under here today, but if wrong, 0.8430 will find bids ahead of the recent 0.8408 low (38.2% of 0.7718/0.8835) today. Further support would be seen at the 4 June low at 0.8401. If/when 0.8400 eventually gives way, a deeper correction would most likely head rather quickly to 0.8275/0.8300, with little support to be seen in between there and 0.8400. Unlikely for now and I suspect that we are more likely in for another run back towards 0.8500 and possibly higher.
Meta Trader – AxiTrader
NZD/USD: 4 Hour
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