The NZDUSD has been on a tear recently, gaining 350 pips since the December 23rd low. And so far, last week’s strength has carried over into the new week.
But the pair is approaching a confluence of resistance near 0.7300 that may not be so easy for buyers to overcome.
The first of two levels is the trend line that extends from the 2016 high at 0.7484. While not a long standing level, it does begin at a significant high for the pair, so it’s certainly worth keeping an eye on.
The second trend line is more established and is one that we discussed several times last year. Beginning in January of 2016, the level had served as support on two separate occasions before later rejecting the mid-December advance.
These two trend lines intersect at 0.7300, which leads me to believe that sellers will be out in force if the pair can rally another 130 pips from current levels.
With that said, the bullish momentum of late means that I’ll need to see a valid sell signal on a retest of the 0.7300 handle. A simple retest alone won’t be enough given how aggressively buyers have rallied behind the NZDUSD.
To reach this area, the pair will also need to overcome the 0.7220/30 resistance area. This region has acted as a key pivot for the pair since the middle of last August. Even today’s selloff is a result of offers near this area.
Support levels and targets to be discussed if and when the pair reaches the confluence of resistance at 0.7300.
Want to see how we are trading this setup? Click here to get lifetime access.