- The NZD/USD rallied to the 0.64 level during the trading session on Thursday but gave gain rather quickly to turn around and fall from the level.
- That’s a level that is the beginning of significant resistance and has been for a while.
- The fact that we ended up forming an inverted hammer does suggest that perhaps we are going to try to break down below the lows of the previous 2 sessions, which opens up a potential move down to the 0.62 level.
On a breakdown below that level, that is possible that we could go down to the 0.60 level, which is a large, round, psychological and figure. That would cause a little bit of noise, but I think that would be a temporary support level, and that we would only bounce just enough to start selling off again. Because of this, I would anticipate that rallies continue to be sold into, but it might also be a bit choppy due to the fact that it is going to be Friday, and a lot of traders don’t like to put new positions on. However, we get some type of big “risk off” type of situation, that will probably send the New Zealand dollar lower, as the US dollar is a safe currency.
Noise Ahead
All things being equal, it’s not a market that looks very positive right now, and now that we have broken the bank down below the bottom of that massive wipeout candle from several sessions ago, I think we are ready to start falling. The one thing that I think is holding this market up right now is the 200-Day EMA, but it’s only going to last for so long.
Quite frankly, we need to see the US dollar selloff in general for this market to turn around and start rallying with any type of momentum. Ultimately, I do expect to see a lot of noisy behavior but given enough time we will probably have to make a bigger decision. The market will continue to be volatile, as the New Zealand dollar is so highly sensitive to risk appetite and of course everything that’s going on in Asia. As things stand right now, this is a market that will have to be looked at with caution.
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