Products You May Like
The NZDUSD is working on the 7th consecutive day to the downside and 9 of the last 11 days. The close from yesterday was at 0.6594. The current price is at 0.6546 so notching the 7th day lower is looking good.
Since the high on January 13, the price has moved 361 pips to the downside in 11 trading days.
Looking at the daily chart, the price is entered an area where a number of swing lows and swing highs were made between June 2020 and November 2020 (the last time the price was this low). That area comes between 0.6488 and 0.6588. The low price today reached 0.6532 – between those extremes.
If there is to be some dip buying, this area should give traders some cause for pause. However, apart from buying closer to 0.6488, I would need a little more confidence from shorter-term technicals.
What might that look like?
Drilling to the hourly chart below, the price yesterday cracked below a downward sloping trendline. That is indicative of an accelerating trend. It could also be a precursor to an oversold market. Getting back above the broken trendline and staying above would be needed to give buyers more hope. That level currently comes in at 0.6571 (and moving lower). Note that earlier today, the price did tried to move back above that level but failed. So staying above is important.
On a break above the 38.2% retracement of the move down from Wednesday’s high (that high stalled right at its 100 hour moving average) comes in at 0.65967. Getting above that level would add to the “win” column for dip buyers.
Those types of moves are starts. Given the sharp fall, there are other targets including the 50% of the same move lower at 0.6616 followed by the the falling 100 hour moving average at 0.66427 (blue line in the chart below).
Fundamentally, the pair is suffering from “risk off” flows from declining stocks, expectations for slower growth in China. The CPI data this week came in at 1.4% for the quarter which is likely to keep the Reserve Bank of New Zealand on a tightening path, but even that data did not help.
US stocks are rebounding off flows with the NASDAQ now up 128 points or 0.97% in volatile trading. The NZDUSD is off the lows, but it is also off the US session highs as well. Nevertheless, it is watching in case risk off flows start to ebb a bit (at least in the short term).
For now, there is more to prove.