- The NZD/USD has fallen again during the trading session on Tuesday, as it looks like the 0.65 level above has offered a significant resistance barrier.
- With that being the case, it would not surprise me at all if we ended up seeing the further downside.
- Short-term rallies now will more likely than not be sold into, at the first signs of exhaustion.
When you look at this chart, you can also make the argument that the 200-day EMA underneath will probably be attractive as the target, but you can also see that we had previously broken through the 200-Day EMA only to turn around we are falling again. I think that might be roughly what we are seeing now and if you squint, you can see a short-term head and shoulders pattern forming. In other words, if we break down below the 0.63 level, it’s very likely that we could find ourselves trying to reach a 0.61 level, based on the “measured move” from that head and shoulders pattern.
Count with Lack of Liquidity
Keep in mind that it’s the end of the year, therefore liquidity will be a bit of an issue, and therefore think we’ve had a situation where a lot of trouble could come into the picture. Furthermore, the market is likely to continue to see a lot of concerns out there when it comes to global growth, and I believe that is something that a lot of people will have to pay close attention to. In that scenario, it’s difficult to imagine that the New Zealand dollar would do well, as it is a commodity currency and of course, it is highly levered to Asian demand.
I believe this point in time we are at a major inflection point, so when we do get a surge lower, I’m going to go ahead and start shorting. On the other hand, if we were to turn around and take out the 0.65 level on a daily close, then I might be convinced to start getting bullish for a longer-term “buy-and-hold” type of scenario. Ultimately, I think the one thing that you can probably count on is a lack of liquidity over the next couple of days, especially as people are worried about holidays, and not necessarily trading at this point.
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