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Forex Analysis
Currently the forex heatmap is showing a move into the Kiwi and a departure from the Swiss franc. From Switzerland this morning the State Secretariate for Economic Affairs (SECO) reported that the economic recovery is set to continue as expected, though growth is initially less dynamic than forecast previously. The expert group has lowered its growth forecast for 2021 to 3.2 % (adjusted for sporting events). This is nonetheless significantly above average for the Swiss economy. Whereas the Statistics New Zealand GDP report showed an increase of 2.8% in the June 2021 which is up 4.3% since pre-covid.
The ActivTrader sentiment indicator is at an extreme level of bearishness, which is probably due to the media reports of continued lockdown divergence between the two countries. As 80% of retail traders usually get on the wrong side of a move, it is safe to say I am looking for reasons to get long.
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The first major reason to get long is that the weekly chart for NZDCHF shows price action is now above the 200-period exponential moving average. The swing high that formed in February 2021 is the years high and since that spike higher to 0.67647 the correction towards 0.6250 was controlled and within a descending channel. Price paused at the previous swing high resistance now support from May 2020 and has since bottoming out there, made 3 weeks of consecutive higher highs and higher lows. Using Fibonacci retracement levels, the 61.8% retracement was the clear target where buyers stepped in. Assuming that they are in it for the long term as this is a weekly chart, the Fibonacci extension to the upside shows a measured move as a good TP1 around the 0.7000 level with a further extension all the way up to 0.7600.
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On a lower timeframe, the H4 chart is about to show an aggressive breakout from the current range and if that were to happen, I would be looking for a retest of that level before a continuation higher. Alternatively, using the Stochastic indicator (10,3,3) and the 50 period ema, the oversold oscillator when confluent with price returning to the dynamic support of the ema, seems for now to be a good level to look for buying opportunities when considering buying the dip.
