Volatility remains extremely low across the Forex market. This is the cause for the choppiness and lack of direction we’re seeing from a lot of pairs lately, NZDUSD being one of them.
In any other market conditions, yesterday’s break of trend line support most likely would have resulted in a significant drop and possibly the start of a new downtrend. However follow-through isn’t so easy to come by with volatility at record lows.
Instead of a break lower we saw the market retest resistance today at .8735. Nothing to do at the moment but wait and see where the market goes from here.
Keep in mind that this is a big level for NZDUSD. That diagonal line on my chart below represents channel resistance from 2011. Break that and we could be off to the races. I’ll continue to treat this as a channel until the market can prove otherwise – with a daily close above channel resistance.
See the weekly chart below.
NZDUSD weekly chart
Our recent discussion about CADJPY started on June 19th with the break above key support at 94. Since that time the market has held firmly above former resistance, now key support.
The first two days this week looked as though we might see a retracement of some sort, however today’s price action looks fairly bullish. If the market is able to hold these levels we may see a test of the 95.80 level in the coming days.
In a similar fashion to NZDUSD, AUDJPY has broken trend line support. The big difference here is that the pair hasn’t made a lower low on the 4 hour chart.
If history repeats itself, the pair may have trouble holding current levels. Just look at how the market reacted the last time AUDJPY broke trend line support back in May.
Then again with volatility so low, trying to get a strong trend either way may be hard to come by.
As a last minute addition to today’s analysis, here is the USDJPY chart I tweeted about earlier today. We’ll see if the bottom of this wedge can hold as new resistance.
— Justin Bennett (@JustinBennettFX) June 25, 2014