The NZDUSD tumbled lower after the RBNZ statement today. That statement::
- Took out reference to higher rates, and
- Said the currency was still overvalued (nothing new with that)
The consolidation/correction – that saw the price test the topside channel trend line (see blue circle 4 in the chart below) – was over. The break of the low from earlier in the week at 0.7397 gave another reason to move lower technically. For giggles I looked at the 1 minute chart after the announcement. The high corrective price after the initial fall? 0.73979. It pays to look for those initial corrections to hop on a potential trend…
NZDUSD approaches the lower trend line on hourly chart.
Anyway, the trend lower continued in trading today and is approaching the lower channel trend line on the hourly chart (see above). The lower trend line comes in at the 0.7245 level The low for the day is at 0.72638. In a market that is now below the 38.2% of the move up from the 2009 low at the 0.73325 level (see weekly chart below), and trading at the lowest level since 2011, this is the next best target for the pair on the downside.
NZDUSD has broken below the 38.2% of the move up from 2009 low (risk level now).
Resistance above is the more easy to define. Looking at the shorter 5 minute chart, the consolidation has allowed the 100 and 200 bar MA to catch up. The price has recently moved a little above the 100 bar MA> This may be a clue the trend move is ready to see a little more buying. Having said the price is back below the MA level. So buyers are not that strong. Also the 200 bar MA (green line in the chart below) at the 0.7307 currently and 50% of the days move lower, should solicit some additional sellers on the first look – if the 100 bar can be broken again (it does not seem it is going to happen soon though)
Note that although there exists the potential for a correction, the move below the 38.2% retracement on the weekly chart at 0.73325 is the new line in the sand that if the price can stay below, the bias remains for lower levels. The level is important.
NZDUSD showing signs of slowing momentum at these levels.
