Potential signal:
- If NZD/USD closes above 0.5865, I am buying for a move to 0.5980, with a stop loss at 0.5810.
The New Zealand dollar has shot straight up in the air again during the trading session on Tuesday as we have tested the crucial 200-day EMA.
NZD/USD
The New Zealand dollar has shot straight up in the air again during the trading session on Tuesday as we have tested the crucial 200-day EMA. We are starting to pull back a little bit from here, so it'll be interesting to see if we are overextended. Part of what we have had traders moving into this market was the CPI numbers in the United States coming out weaker than anticipated. That being said, there are still a lot of concerns out there, and I think you're already starting to see some of that play out in other assets. The stock market took off immediately; it started giving those gains back.
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Testing Key Moving Average and Fibonacci Resistance
Now we have to ask questions of the Middle East war because that's now back in the headlines, and whether or not inflation picks back up. New Zealand has recently raised rates, so that's part of what's been going on with the New Zealand dollar, but we are approaching the 61.8% Fibonacci retracement level. We have touched the 200-day EMA after a massive drop. We'll see whether or not this bounce has enough momentum to continue to go to the upside.
But I certainly think this is an area that if we are going to find trouble, it's going to be right here. We had seen a couple of shooting stars form during the Friday and Monday candlesticks, but blowing through the top of those is a very typical bullish sign. Again, though, there is so much noise in this area that I think it's probably only a matter of time before we see a little bit of pushback. If not, and we can break above the 0.5865 level, then we probably have further to go, possibly as high 0.60, but we would need to see the New Zealand dollar strong against multiple currencies, but more importantly, I think we would need to see the US dollar weaken considerably against pretty much everything else.
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