The New Zealand dollar is at a crossroads that could trigger an opportunity in the days ahead.
Get all the details and see exactly how I’m trading it in today’s video.
NZDUSD is an interesting one as there are dynamics at play on both the daily and weekly charts.
On the one hand, the pair is holding below key resistance at 0.6870.
And on the other, the weekly time frame recently produced a false break below channel support.
Let’s talk about the weekly time frame first and work our way down.
Notice in the weekly chart above how NZDUSD recently closed below descending channel support near 0.665.
However, the New Zealand dollar hit support at 0.653 immediately and wasted no time retesting channel support as new resistance.
As I often say, an immediate retest (versus a rounded one) usually precedes a false break.
Another thing about false breaks is that they often trigger extended moves in the opposite direction, and the NZDUSD was no exception.
The pair closed back above channel support a few weeks after closing below it and is now up over 200 pips.
Now, the pair is already up about 200 pips since the confirmed false break in mid-February. But I’m still reluctant to short NZDUSD because of it.
So for that reason, I’m going to wait to see if we get a daily close above 0.6870 for a long opportunity.
If NZDUSD can get above that 0.6870 on a daily closing basis, I think the next stop is channel resistance near 0.7050.
Just keep in mind that 0.6870 is still serving as resistance.
That’s a significant facet of the chart. So until the New Zealand dollar gets back above 0.6870, any longs here are ill-advised, in my opinion.
To be fair, NZDUSD may not manage to get above 0.6870, and that’s okay.
But as mentioned above, I’m not interested in shorting the pair given the bullish momentum since the mid-February false break.
As always, none of the above is financial advice as it’s just my opinion.