- NZD/USD is perched at the top of the canopy leading into the RBNZ.
- Bulls will be looking for an upside extension on a less dovish outcome.
The following is an analysis of the hourly time frame and price structure ahead of the Reserve Bank of New Zealand event at 01:00 GMT.
When is the RBNZ and how it could affect NZD/USD?
It should be noted that higher volatility is expected around such an event and trading is a far riskier practice.
Reducing exposure to price volatility is common-practice around such high profile events.
Last meeting around, the price rallied around 90 pips within the hour immediately after the announcements, dropping from 0.69238 to 0.6809 before rallying:
NZD/USD hourly chart
As can be seen, the price is in an uptrend and there are little signs that the bulls are tiring while above support.
The upside target is modest but it is based on the correction’s range and comes as a measured -61.8% Fibonacci retracement to 0.7354.
The setup can be better managed from a lower time frame, such as the 15-min chart as follows:
15-chart
In the build-up to the RBNZ event, a deeper retracement would be ideal which would raise the target level accordingly to the Fibonacci measurement of the correction’s range and offer deeper support.
However, a position that is taken at the market with a stop-loss below the current lows and structure already offers a 1:2.7 risk to rearward ratio.
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