NZDUSD has no doubt been one of the more volatile currency pairs over the last few months. However, for the swing trader, the recent ebb and flow of the market has been a dream to trade.
Since the 320 pip move following June’s Brexit, the pair has carved out several strong directional moves, ranging from 150 to almost 400 pips. Additionally, the price action since June has done well to respect several critical support and resistance levels.
Yesterday’s session may have marked yet another turning point as the 0.7255 handle has thus far managed to cap the recent 300 pip rally. This level is the June 23rd high and also served as a key pivot between the 8th and 13th of July.
Today’s break below ascending channel support hints at the idea that further weakness is ahead. We had our eye on this pattern during the Asian session and watched as the pair closed below support. I subsequently entered short at 0.7202 and will look to add to the position should sellers remain in control.
From here the 0.7160 area should attract buyers, but I’m not so sure they’ll be able to stop the bleeding. With this in mind, a close below 0.7158 (preferably on the 4-hour or daily) would expose multiple lows from July at 0.7080 with a break there opening the door for a move to the well-respected 0.6970 handle.
Keep in mind that the latest non-farm payroll number will be released this Friday at 8:30 am EST, so be sure to manage any US dollar exposure accordingly.
Want to see how we are trading this setup? Click here to get lifetime access.
