NZD-USD Moves in a Channel

By: Mike Kulej

The New Zealand Dollar has been in limbo for a while. It has not been moving steadily in any particular direction, at least not against the US Dollar. It seems that the sentiment changes every few days, which is reflected in this intermediate term chart.

NZD-USD Analysis January 27 2011

The NZD-USD rallied strongly in the last part of 2010. It advanced from 0.7340 to 0.7813, but has since settled into more of a sideways drift. If anything, it is creeping lower, making slightly lower lows and highs. However, this is happening in wide swings, spanning about 250 pips, forming a channel.

NZD-USD Looking Forward

Currently the price is once again moving higher within this channel and is poised to test its upper line. That could come in around the 0.7775 level, where the market will decide if this channel is for real. If that resistance holds, the NZD-USD could swing back down, to around 0.7500.

Price channels do not last forever and neither will this one. More often than not, they are broken in the same direction as the trend before the channel started to form. In case of the NZD-USD, that means a continuation of the uptrend and it should be tested soon. 

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