NZDUSD has gone parabolic so far in the month of June, rallying 340 pips from the May 30th low at 0.6674. But the pair is fast approaching the double top that formed between April and May at 0.7053.
While the pair failed to reach the pattern objective at 0.6550, the 0.7053 handle is without question a significant level. Also, the upper boundary of the ascending channel that extends from the August 2015 low lies just 80 pips beyond the key horizontal level.
As the title of this post suggests, all of this is happening just hours before the RBNZ rate decision, which is scheduled for 5 pm EST with a presser two hours later at 7 pm.
With this in mind, it is not advisable to trade NZDUSD or any New Zealand dollar pair until the dust settles. Interest rate decisions have a long history of producing extreme levels of volatility coupled with subpar liquidity.
That being said, knowing where key support and resistance are ahead of time is always beneficial. It allows us to watch for favorable price action following the event without becoming emotionally compromised and lured in by the ensuing volatility.
If the RBNZ cuts rates or casts a dovish tone, a move lower from current levels would likely find support at 0.6950 followed by 0.6835.
Want to see how we are trading this setup? Click here to get lifetime access.