New lows stall at a 2010 low
The NZDUSD tumbled in trading this week after the surprise cut in the official cash rate to 3.25% from 3.5% by the RBNZ on Thursday. The pair gapped lower to a low of 0.7041, retraced about 38.2% of the 190 pip plunge and fell 138 pips from that corrective level.
The 38.2% correction level was a great level to hold resistance, as it also corresponded with a low floor from May 29th to June 2nd (see 4 hour chart below). That floor was centered between 0.7075 and 0.70829.
The move lower (see continuation of the 5 minute chart below) has been orderly by not in a huge hurry. Today, saw the price extend to new move lows and that fall took the price to the next key target.
That target came in against the low going back to August 2010 at the 0.6945 (see the weekly chart below). The low today did get to 0.6941 just below that next most recent low and the buyers started to cover before the weekend.
So into next week, the market will be targeting getting through that low target at the 0.6945 level. Below that the 50% of the move up from the 2009 low comes in at 0.6866. If the pair is able to get through that level, the low from June 2010 comes in at 0.6793.
On the topside we need to go back to the 5 minute chart where there is a topside resistance trend line that comes in around the 0.7000 level. Above that, and keep an eye on 0.7023-26. There are a number of highs against that ceiling are in trading over the last two days (see red circles on the 5 minute chart above). Staying below would keep the bears in charge and also help to keep the dip buyers frustrated and fearful.