The New Zealand dollar has been very choppy over the last several months but has been drifting higher. In fact, even though the Royal Bank of New Zealand has suggested that the next move might be an interest rate cut, it’s hard to ignore the fact that there is a major uptrend line that is being respected. Beyond that, we could be forming a bit of an ascending triangle if you ignore the wick on the hammer at the bottom of it.
The Federal Reserve of course is at least a year away from raising interest rates, so the selloff after that press conference in Wellington was probably a bit overdone. Beyond that, you would be better served to pay attention to what the charts are telling you as opposed to trying to figure out what other people are thinking. Looking at this chart, it appears that we are seeing a grind higher. That grind shows resiliency that will continue to show itself during the month of April, reaching towards the 0.69 level where we see about 100 pips worth of resistance. Breaking above the 0.70 level opens the door to much higher levels, perhaps reaching the 0.7250 level.
On the other side of the equation, if we do break down below the trend line that I have drawn on the chart, somewhere near the 0.6750 level, then we could break down a bit and bus the pattern. However, it’s likely that we continue to see value hunting come into this market, so I do believe that we will eventually press that resistance barrier above. If that happens, and of course we break out, that would be a very sudden move. Overall, I’m bullish but I recognize that this is going to be a very noisy market.
