For those who missed the initial NZDUSD breakout that occurred at the start of the week, you may be in luck as there appears to be another favorable (potential) opportunity on the horizon.
The New Zealand dollar, like most other US dollar-quoted currency pairs, has had a rough go of things this week. The NZDUSD is currently down more than 200 pips from Monday’s open and could travel much lower if the 0.6620 area gives way in the coming sessions.
This area represents confluent support between the horizontal level that has played a role since July of last year and trend line support that extends off of the September 2015 low at 0.6240.
The chart below shows the price action as it stood during yesterday’s session at approximately 1pm EST. Note that, although the pair closed the day in the red, it did find a bid in this area intraday.
We can use this type of intraday movement to help reaffirm key levels of interest, and the 0.6620 level certainly fits the bill. So although I won’t be interested in taking a long from this area, I know that a close below it will likely bring about additional downside pressure.
Keep in mind that the next 24 hours of trading features the US non-farm payroll at 8:30am EST. However, instead of viewing the event as something to trade, think of it as a catalyst that could potential turn this simple idea into a confirmed trade setup for next week.