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NZDUSD Finds Support at September High, but Will It Last?

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NZDUSD fell to its lowest level since mid September during yesterday’s session. The pair is now resting on new support at 0.6455 after being down more than 400 pips since the October high at 0.6896.

I mentioned the 0.6455 handle over the weekend as a level that could produce a bid this week. A look back over the last few months shows that this level was actually the high for the month of September.

The 4 hour chart below shows the support level in action during yesterday’s session.

NZDUSD support level on the 4 hour chart

While I wouldn’t attempt trading this on an intraday basis, the demand shown in the 4 hour chart above does indicate that this level is worth keeping an eye on.

The question now becomes, how strong is the demand at this level?

If recent price action is any indication, this level may not hold as support for very long. Also note that we have the release of the FOMC meeting minutes over the next 24 hours, an event that is usually good for an increase in volatility for the US dollar.

A retest of a former resistance level as new support like this may tempt some to take a crack at a long position. However that may not be the prudent choice for two reasons.

  1. The broader downtrend that began in July of 2014 is still intact
  2. The failed attempt to stay above the trend line that extends off of the July 10th (2015) high, which broke down on November 6th

For these two reasons, along with renewed strength in the US dollar over the last few weeks, I’m only interested in a short opportunity going forward. Of course in order to make it a favorable opportunity, we first need to see a close below the 0.6455 handle.

Below that, the next key support level doesn’t come in until the September lows near 0.6240. Only a close back above the four-month trend line would negate the bearish bias and turn our attention higher.

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NZDUSD key levels on the daily chart

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2 comments
ninner says

regarding the NZDUSD, I waiting for it to get above the .6680 area to show me that the trend is resuming but one im watching the NZDCAD is also looking interesting. one trade i have been is is the CADCHF since 0.7435..a nice little trend so far

Reply
    Justin Bennett says

    Ninner, sounds good. I personally don’t see anything favorable on NZDUSD at the moment so I will remain on the sidelines.

    Reply
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