The New Zealand dollar has been shopping around for several weeks now, but when you zoom out you can see that we are trying to form a bit of an inverted head and shoulders. This is obviously a very bullish pattern, and quite frankly at this point it does look like we are trying to turn the corner. It’s also been seen in the Australian dollar, perhaps traders are starting to focus on the possibility of a “phase 1” being signed between the Americans and the Chinese.
To the upside, the 0.6450 level begins a 50 PIP range of resistance. In other words, if the market was to break above the 0.65 level that something that should be paid close attention to. If that level gets broken above, it would not only clear a large, round, psychologically significant figure, but it would also break through the 200 day EMA, which also attracts a lot of attention. All things being equal, this is a market that is likely to continue to be very rocky and noisy, but as long as we can stay above the 0.63 level, or essentially the bottom of the recent “shoulder”, one has to think that eventually the market will try to break out to the upside. With that, market participants continue to look at this as a level that if broken, could bring a substantial amount of momentum into the marketplace. The implied move would be for the New Zealand dollar to reach towards the 0.6785 level, which happens to be the top of the most recent move lower. That being the case, everything lines up perfectly for that potential break out. However, if we were to break down below the bottom of the “shoulder”, that would negate all bullish pressure in this market, at least for the time being.
To the upside, the 0.6450 level begins a 50 PIP range of resistance. In other words, if the market was to break above the 0.65 level that something that should be paid close attention to. If that level gets broken above, it would not only clear a large, round, psychologically significant figure, but it would also break through the 200 day EMA, which also attracts a lot of attention. All things being equal, this is a market that is likely to continue to be very rocky and noisy, but as long as we can stay above the 0.63 level, or essentially the bottom of the recent “shoulder”, one has to think that eventually the market will try to break out to the upside. With that, market participants continue to look at this as a level that if broken, could bring a substantial amount of momentum into the marketplace. The implied move would be for the New Zealand dollar to reach towards the 0.6785 level, which happens to be the top of the most recent move lower. That being the case, everything lines up perfectly for that potential break out. However, if we were to break down below the bottom of the “shoulder”, that would negate all bullish pressure in this market, at least for the time being.