The past week-and-a-half of trading for the NZD/USD is likely proving difficult for traders with a bullish perspective.
The NZD/USD has been in a sustained bullish trend since the end of September, but the past week-and-a-half has seen a reversal lower. Late December values are now being tested and support junctures within the NZD/USD have proven to be vulnerable the past week-and-a-half. Speculators who continue to believe a bullish trend will re-emerge have certainly been tested short term as they contemplate recent results and look at technical charts.
Support near 71.00010 to 71.00000 looks like it may become important inflection points for the NZD/USD. Trading this morning tested the 71.00000 juncture below, but the NZD/USD did manage to stage a slight reversal higher, at least temporarily. After demonstrating a strong bullish trend since the tail end of September, bullish speculators who have become accustomed to the upside movement may need to re-adjust their thinking short term.
However, upside action for the NZD/USD still appears enticing, particularly taking into consideration that the recent bearish move within the Forex pair may be simply a normal cyclical reversal of value, which happens within most currency trading. Traders certainly need to be careful while bearish sentiment appears strong, but speculators may look at current support levels and believe that they can create a foundation and become opportunities to seek buying positions.
If support continues to be tested and the 71.00000 level proves weak, the next support level which may face a test is the 70.88000 level. This level was tested just before Christmas and after the holiday. If the 70.88000 juncture fails to be adequate, bullish sentiment could evaporate and more bearish action should be expected. However, the potential for further erosion and downward price action from the NZD/USD may appear limited to many speculators.
The NZD/USD has demonstrated a strong bullish run higher mid-term and the recent selloff of the Forex pair may prove to be a short-term regression. Speculators may find current support ratios as potentially attractive spots to target as ratios to initiate limit orders to buy the NZD/USD and look for reversals higher. Because choppy conditions have been prevalent the past week, it will be wise not to get too greedy regarding upward momentum and simply look for fast trades which can be cashed in quickly when profits occur.
NZD/USD Short-Term Outlook:
- Current Resistance: 0.71330
- Current Support: 0.71050
- High Target: 0.71530
- Low Target: 0.70880