NZDUSD: Future Direction Hinges on These Two Levels

The RBNZ statement earlier today has rocked the New Zealand dollar.

You can always tell if the outcome of an event was relatively expected or not by the market’s reaction to it.

In the case of the NZDUSD, I think it’s safe to say the market was surprised by Wednesday’s statement.

That’s evident by the massive selloff within the first 60 seconds of today’s events.

In fact, it took less than 60 seconds for sellers to push NZDUSD 87 pips lower.

Today’s plunge has brought the pair back to ascending channel support that extends from the 2018 low.

The price action last October and early November was a pivotal moment for the NZDUSD.

I even wrote about the bottoming formation last October.

However, now we have an even larger channel in play. This time it’s an ascending formation that if broken, could take the pair back to that 2018 low at 0.6430.

The NZDUSD is being forced into channel support by the 0.6935 horizontal level.

You can see in the chart below how this resistance area has capped every advance since December of last year.

Buyers’ inability to push past this level on March 21st has the pair retesting channel support once more.

As always, a daily close below support is paramount.

Until that happens, the 0.6790 area will continue to attract bids.

A daily close below channel support would expose the 0.6710 area and perhaps the year-to-date low at 0.6590.

Don’t forget that channel breaks tend to target the pattern’s inception point which in this case is the 2018 low at 0.6430.

That’s 360 pips below today’s price, so it’s something worth keeping an eye on.

Alternatively, a daily close above 0.6935 resistance would relieve the pressure and expose the 0.7050 area.

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