The NZDUSD is right back to the confluence of support at 0.7290 just 14 hours into the new trading week. To be more precise, the level appears to be 0.7288 at the time of this writing.
We discussed this area over the weekend as one to watch. At the moment, we are patiently waiting for a break of the range between 0.7290 and 0.7340. A close above 0.7340 or below 0.7290 would be a clue as to the pair’s likely path forward.
As you can see from the chart below, buyers broke through trend line resistance on June 28th. The level has since acted as support on a daily closing (5 pm EST) basis.
This dynamic is important to understand because it could affect what happens next. For instance, if the NZDUSD were to close the day back below 0.7288, it would be a sign that last week’s break was false.
If it turns out to be a false break, we can use that information to build a case for a short position. I wrote a lesson on how to use false breaks of key levels as buying or selling opportunities.
Of course, that’s just one scenario. The other would involve a daily close above last week’s high of 0.7343. If you want an extra layer of assurance, waiting for a close above the rising wedge top near 0.7360 wouldn’t be a bad idea either.
But with the pair once again weighing on support at 0.7290, buyers have their work cut out for them. This is particularly true considering we’re still in the first 24 hours of the new week; not a great start for NZDUSD bulls.
At this point, I’m just waiting to see which side wins out. And with the U.S. offline tomorrow for the 4th of July holiday, I may hold off on any exposure until Wednesday. But I’ll let the markets dictate that decision.
Note: To make it easier to see, I have removed the 10 and 20 EMAs from the chart below.
Want to see how we are trading this setup? Click here to get lifetime access.