NZD/USD Price Appears Range Bound But There is Possibility of a Momentum Trade

United States – Building Permits

Today 18th August, at GMT 12:30 p.m., the US Census Bureau will release the Building Permits figure, which is an annualized number of new building permits for the residential housing sector issued during the last month.

Since getting a building permit usually indicate future construction work, binary options traders consider this data to be a leading indicator of the overall economic activity in the country.

Last month, 1.34 million building permits were issued and this month, analysts are expecting the figure to come out around 1.21 million

New Zealand – GDT Price Index

Later in the day, the Global Dairy Trade will release the GDT price index, which measures the changes in the average price of dairy products sold at auction in New Zealand.

Since the bulk of New Zealand’s exports to the world market consist of dairy products, the GDT price index acts as a leading indicator of the country’s trade balance because the rising price of dairy products ensures that foreign buyers have to purchase it at a higher price. Therefore, the binary options traders use this data to predict future trade balance, which helps in the valuation of the New Zealand Dollar against other major currencies.

On August 4, the GDT price index decreased by 9.3% after decreasing 10.7% in Jun 15. If the current trend continues, it would likely push the GDT Price index further down this week.

Trade Recommendation for the NZD/USD

NZDUSDDaily

Since April 29, the NZD/USD price has remained in a steady downtrend and formed a well-respected downtrend line. Although the price penetrated and closed above this trend line on July 28, it soon resumed the downtrend and reached as low as 0.6467 by August 12.

As soon as the NZD/USD price reached the 0.6467 level, the price spiked up and formed a large bullish outside bar (BUOB) which engulfed the last 9 daily bars.

Since both the US building permits and New Zealand GDT price index are expected to turn worse compared to the last reported periods, there would likely to be no clear directional movement in the NZD/USD price this week.

However, if the price penetrates above the high of the BUOB, the momentum may keep the price above this level for the next few days.

Under the circumstances, it is recommended that traders consider placing a CALL order for the NZD/USD with their binary options brokers, once the price penetrates above the high of August 12, which is at 0.6650.

Recommended Broker: GOptions

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