Daily Price Action
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NZDUSD Consolidates Between Support and Resistance

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With NZDUSD 150 pips lower since the last time I covered the pair as a daily setup, I figured I’d take the opportunity to provide an update.

Last week ended with a clean break below channel support that extends from the May low at 0.6675. This level was tested on three previous occasions including the July 14th intraday test just hours before buyers threw in the towel.

Since that time, NZDUSD has closed below the 0.7080 handle, another area that was expected to act as support and did just that on July 18th. With the pair now firmly below 0.7080, we can now watch for a retest of this area as new resistance.

We can also use this level as a way to gauge relative strength and weakness. For example, if the pair were to close back above 0.7080 on a 4-hour basis, I would be inclined to take up a more defense posture considering I’m short from 0.7180.

Alternatively, any bearish price action from the level could make for a compelling opportunity to get short or add to an existing short position.

If the pair fails to reach 0.7080, traders can watch for a close below the 0.6986 handle as a sign that further losses are likely. In fact, between the two levels we just discussed, I believe 0.6986 offers the greatest potential to the trader looking for a breakout.

Given the 100 pip distance between current prices and the 10 and 20 EMAs on the daily time frame, I wouldn’t be surprised to see this consolidation continue for another day or two before the next leg lower materializes.

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NZDUSD break below channel support on the 4-hour chart

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