As I write this, the NZDUSD is trading at its lowest level since mid-January. What’s more significant, however, is the fact that sellers have overcome key support at 0.7133. This area has kept the pair afloat since the first retest on February 14th.
But let’s not get ahead of ourselves. Yes, sellers have broken 0.7133 on a 4-hour closing basis. And although this looks like a clean break, the range bound and somewhat sporadic conditions of late leave me waiting for a daily close at 5 pm EST.
When deciding whether to enter on an intraday break or wait for the session to close, it’s important to put things into perspective.
Over the last few weeks, the NZDUSD has moved on average about 60 to 70 pips (at most) in any given session. Today’s range is already just 6 pips shy of 100. So the odds of missing out on a move lower today are pretty slim.
Also, today’s drop leaves the pair 70 pips below the mean as measured by the 10 and 20 exponential moving averages. With this in mind, there’s a good chance we’ll see some consolidation in the 0.7133 region before the next leg materializes.
So, for now, I’ll wait to see what price we get at 5 pm EST. A close below the 0.7133 handle would have me watching for a sell signal on a retest of the area as new resistance. The next key support level doesn’t come in until the 0.7040 area.
On the flip side, a close back above 0.7133 would keep the 100 pip range intact. Key resistance from there would come in at 0.7240, a level we’ve had on our radar for several weeks.
But as mentioned in recent days, I won’t consider buying the NZDUSD while below the 2016 trend line. That level is now several hundred pips above today’s price.
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