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NZDUSD Technical Structure Points to Lower Prices Ahead

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NZDUSD has been a roller-coaster ride since the middle of last year. The choppy and somewhat unsuspecting price action has been especially disruptive over the last six weeks.

Speaking of disruptive, last week’s RBNZ rate cut, which sent the pair lower by 160 pips in a matter of minutes, caught many traders by surprise. To top things off, yesterday’s session saw the pair rebound aggressively, but fell short of recapturing the 0.6750 handle.

All in all, this has been a tough pair to trade lately. However, one positive thing can be said about any range-bound market, and that is that it will eventually capitulate, it’s just a matter of how and when.

In the case of NZDUSD, the wedge shown in the chart below could offer clues about how and when the pair will break free from consolidation. But as tempting as it may be to trade a break below wedge support (should it happen), keep in mind that we have FOMC this Wednesday, immediately followed by New Zealand GDP.

With this in mind, I prefer waiting until these events are behind us before looking for an opportunity here.

Another level to keep an eye on going into the next few sessions is 0.6555. This area acted as resistance in January and early February and later supported prices on February 16th and 17th. A close below this area could offer a favorable opportunity to get short.

Last but not least we have the GDT price index, which is due out any minute now. This reading should have a strong influence on whether the pair breaks wedge support or catches a bid and moves higher from current levels.

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NZDUSD wedge pattern

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