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NZDUSD: Keep an Eye on 0.6985 Next Week

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The NZDUSD broke a significant support level on October 20. We discussed the breakdown the following Monday as the pair was retesting the former support level as new resistance.

Even Tuesday (October 24) tested the conviction of sellers. But ultimately, the NZDUSD sold off toward our target of 0.6820. In fact, the October 27 session low was 0.6818, just two pips below the May low that we were using as our objective.

Not surprisingly, the pair caught a bid after several days of consolidating above the 0.6820 handle. At the time of this writing, buyers have taken prices back into the 0.6930 region.

So is the downtrend finished?

The answer is an unequivocal no from where I’m sitting. There are never any guarantees in the market, but as long as the New Zealand dollar is carving lower highs and lower lows, I’m going to watch for selling opportunities.

That brings us to the confluence of resistance at 0.6985. It’s one of the more impressive value areas I’ve seen thus far in 2017.

Three levels intersect to form this area. First up is the trend line I mentioned last month. The trend line that extends from the September 2015 low is well worn and helped attract offers on the 23rd and 24th of October.

Next is the horizontal level at 0.6985. While it isn’t as apparent from recent price action, a look at the weekly chart shows how it served as a pivot between April and July of last year. It’s also the 38.2% Fibonacci retracement from the 2015 low to the 2017 high.

Last but not least is the descending channel that spanned the July 27 high at 0.7558 to the October 19 low at 0.7009. It’s more obscure than the other two levels but just as important. The channel floor was broken on October 20 session and should now attract sellers.

It isn’t clear whether or not the NZDUSD will make it as high as 0.6985 next week. If it does, I’ll be on the lookout for a favorable selling opportunity. If it doesn’t, I will wait for a daily close below 0.6820, unless an entry materializes on the 4-hour chart.

A daily close at 5 pm EST below the 0.6820 handle would target the May 2016 low at 0.6675. Alternatively, a daily close back above the 0.6985 resistance area would turn our attention higher. Until that time, I’ll remain bearish the NZDUSD.

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NZDUSD confluence of resistance on the daily chart

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12 comments
TJ says

Hi Justin,
I’ve been searching the web since few years now trying to figure out the best way to trade. I am a part time demo trader for now, but I’m looking forward to become a full time trader. I am working hard on discipline to stay constant. I am following you since few weeks now and you are by far the best I found on the internet till now. No ads on your site, no selling pressure.

Thank you to make me think that there is something else than crooks on the internet.
When I’ll be ready, you will surely be part of my tool box.

Another simple and nice analysis, thank you for sharing.

Reply
    Steve says

    I’m also part time Demo trader from Africa, Kenya looking forward to be a full time trader. This site is by far the best thanks to Justin. You story is motivation, I also gave up with trading a couple months ago after blowing two demo accounts. Last month I decided to give it a final shot after a friend recommended me two sites, this and another. Been following up and I can second you that this is one of the best so far. However, I’m yet to consistently make profit on my demo, a bit scared of going live yet.

    Reply
      Steve says

      *almost gave up

      Reply
      Justin Bennett says

      Thanks, Steve. Just keep at it. It takes most traders years to find something that fits their personality and develop the discipline necessary to succeed.

      But as long as you have a passion for trading, it should never feel like work. Cheers.

      Reply
    Justin Bennett says

    Hi TJ, you’re welcome. Thanks for the kind words.

    Let me know if you have any questions.

    Reply
MJ says

I see a divergence in H1 chart , that means a down in short term

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    zenzele mbutho says

    so we can expect selling opportunity the whole week next week ?

    Reply
Roy Peters says

Waiting patently on the sidelines for a selling opportunity.

Awesome Analysis Justin.

Reply
    Justin Bennett says

    Thanks, Roy. Have a good weekend.

    Reply
Ian Smit says

Hi Justin,

Don’t know if you will get this mail but I sent it anyway. Will you perhaps check the GBP/CAD on Daily time frame. There is an inverse H/S, a breakout and now a deep retrace back to the neckline. Just want to know what is your take on it. The same on the Daily $ Index.

Regards
Ian Smit

Reply
    Justin Bennett says

    Well, that’s a move back below the neckline. See last weekend’s forecast.

    Reply
Moh nurokhman says

A very good analysis , thanks mr.Justine, I agree and like this

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