The NZDUSD has been one of the better performing currency pairs of late. One currency pair that might challenge that title is the USDJPY.
The last time we looked at the New Zealand dollar, buyers had just reached the confluence of resistance at 0.6985. It’s the intersection of three levels.
First is the trend line I mentioned in October. It extends from the September 2015 low and helped attract offers on the 23rd and 24th of October.
Next is the horizontal level at 0.6985. While it isn’t as apparent from recent price action, a look at the weekly chart shows how it served as a pivot between April and July of last year. It’s also the 38.2% Fibonacci retracement from the 2015 low to the 2017 high.
Last but not least is the descending channel that spanned the July 27 high at 0.7558 to the October 19 low at 0.7009. It’s more obscure than the other two levels but just as important. The channel floor was broken on October 20 session and should now attract sellers.
The high just before I released that November 9 commentary would be the last for buyers. Since carving a session high of 0.6980, the pair has lost 180 pips and also reached our first target at 0.6820.
That area not only attracted bids in late October, but it also served as support in May. We have to go back to June of last year to find the last time the NZDUSD was trading below the 0.6820 handle.
You may recall from the most recent weekly forecast that a daily close below 0.6820 would open up support at 0.6675. That’s precisely where we are today.
If sellers manage a daily close below 0.6820, I will begin watching for a retest of the area as new resistance. The 145 pips of real estate between 0.6820 and 0.6675 make this one worth keeping an eye on as we move into next week.
As long as 0.6820 holds as resistance (provided we get a close below it), I will remain bearish the NZDUSD.
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