On late Tuesday this week the NZD/USD was around the 0.60550 vicinity when it began to suffer an abrupt selloff that began to show velocity downwards. By early this morning the NZD/USD was touching the 0.59575 mark. The sudden motion downwards in the NZD/USD could be interpreted as financial institutions believing the New Zealand Dollar had been overbought. The NZD/USD was near a high of almost 0.60770 last Thursday.
However, before day traders simply throw up their hands in the air and blame the move downwards on the bearish trend the New Zealand Dollar has been within over the long-term, there is another consideration. The NZD is actually correlating to other major currencies that are finding a rather choppy road against the USD the past handful of days. And there may be some actual optimistic thoughts about the NZD mid-term.
NZD/USD Ideas and Entanglement
Yes, towards the end of January the NZD/USD was around the 0.60960 vicinity and has since given back its gains, but many other major currencies have suffered the same predicament against the USD. Nervous behavioral sentiment seems to be generating a series of backlashes which have caused plenty of reversals in the broad Forex market. Momentum in one direction is being met by regressions of opposite force.
Technical traders have an advantage in the current markets, but they will have their perceptions tested too by the reality of choppy conditions. The bounce higher from this morning’s lows in the NZD/USD may have been a logical reaction by those who believe the currency pair was oversold. From the end of January until yesterday the 0.60000 level had proven rather sustainable as support. The question for day traders now is if they believe the 0.60000 will again be penetrated in the near-term or if it will simply become resistance.
Weaker USD Centric Notions
The weaker USD centric bearish trend seen in the broad Forex market may not be over.
- And the choppy conditions being seen now may simply be a reflection of nervous conditions which will spark reversals higher for the NZD/USD.
- But before a day trader is bold enough to bet on upside, solid risk management will be needed.
- Because the NZD/USD is moving fast, and the broad Forex market has shown signs of potentially more combustion to develop today and tomorrow.
- Speculators who want to look for more upside in the NZD/USD should not get overly ambitious if profits are seen and know when to cash out winnings.
- The reversals being seen in the broad markets the past couple of days is a warning sign for all to be cautious.
NZD/USD Short Term Outlook:
Current Resistance: 0.59875
Current Support: 0.59820
High Target: 0.60150
Low Target: 0.59760