Like several other currency pairs, the NZDUSD has been a bit stubborn since the beginning of June. This isn’t too surprising given that it’s vacation season for many, so things do tend to slow down this time of year.
However, New Zealand dollar bulls have worked their way into a corner and are quickly running out of real estate. There is an ascending channel that has developed on the intraday charts that has kept the pair supported since late June.
In my experience, upward sloping patterns such as this lead to reversals more often than not. For the NZDUSD, that would mean a pullback to the 0.7200 handle and perhaps even 0.7125 or lower.
One thing to keep in mind here is that last week’s low is also a critical support level. The 0.7240 handle has been a key influence for the pair since August of last year. It was more recently the pivot between January 24th and February 23rd.
So while a close below the support level shown below could trigger a move lower, it may be prudent to wait for sellers to take out last week’s low at 0.7240. That would pave the way for a retest of the next key support level at 0.7200 and perhaps 0.7125.
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