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I’m going to get started today on the New Zealand Dollar versus the US Dollar [NZDUSD]. Starting here on the Daily Chart, we have been studying this range for quite some time. The range is highlighted by the red box that you see here on the chart, but most important right now is the top of that range and the blue-shaded area at the top of the box.
If you follow it all the way back over to the left-hand side, you could see, back in early April, we could see resistance here, where the market came up, challenged into this price zone between the 0.8715-level and the 0.8735-level. Challenged here and made a fall back down to the green-shaded area. We saw resistance and then support right back down into the bottom of the range, into the green zone.
Then it made another rally and came right back up here into the beginning of May. Challenged here into the beginning of May, into the blue zone once again, found resistance, and then fell back down. This time challenging underneath the bottom of the range, but it was unable to sustain that breakout underneath the range and now has moved back within or above the range. Then we came back up several days and, past couple of weeks, we’ve seen resistance into that blue-shaded area. Again, five days finding resistance under the blue-shaded area. Finally the market getting some momentum from support into the pink zone and making a rally above the blue zone. For the first time, we see a daily candle open and close above the blue-shaded area for the first time in several months.
So, now that we’ve seen that open and close on a couple of days, this blue-shaded area, which was historical resistance, now becomes our current support. We know that historical resistance can help us identify those supports into the future. We can now take the Fibonacci levels and begin to draw them out even further to the resistance highs. That brining the Fibonacci retracement measurement levels much closer to the current market.
Yesterday, during the Trade Room, we also applied this bullish trend line – the red trend line here – showing us the uptrend and showing us the breakout and the market coming down to challenge that red trend line and the blue-shaded area all at the same time as support. So, for the day today, the 0.8740-level or right into that blue-shaded area and that red trend line become our support. If you’re going to look for an opportunity to buy a currency pair in the direction of the trend and the momentum, which of course is up right now, then it’s often best to look for opportunities to buy it on dips into support, because that provides a lower risk and higher reward opportunity.
If you were to buy it at the very top or very peak high of the trend, let’s say all the way up there into 0.8780, where the cap highs are; if you would’ve bought it up there, you’re now having to endure this little pullback that it’s having. But if you wait for that dip into support, wait for that push back to the red trend line and the blue-shaded area, then that provides a lower risk scenario for your trading. So, if you’re looking for a buy today, buying into the blue zone, looking for a new high to be made for the NZDUSD is really what you’re looking for.
Forex Black Book trend bar is green. It is bright green today, so that implies bullish momentum also. Buying momentum also. So, what you’re going to be looking for on the 4-Hour Chart of course will be a new green arrow to give you an opportunity to take a buy. So, let’s go ahead and do that. Let’s take it all the way down to the 4-Hour Chart. And as we get down here, we could see the same red trend line. We could see the market sitting down on top of the blue-shaded area.
Yesterday we saw it coming back down here into the 0.8730s, made a little bit of a bounce back up into the 0.8770s. As long as, I think, it holds above this blue-shaded area and the blue trend line, or red trend line today, there’s potential for us to get a new bounce off of this level and a new high to be made. So let’s take a black arrow. This is our opportunity for the day today. Staying above the red trend line and the blue-shaded area, buying, looking for a new high above the 0.8775, 0.8780 highs that we see here on the chart.
In fact, let’s go ahead and put a highlight here. I’m going to bring this down to about right here. 0.8770. Let’s bring another line. Put it right about – we’ll put it right here at the 0.8785-level, and I’m going to put a new highlight on the chart just to highlight our current zone of resistance. I’m going to change it to a different color here. Let’s make it the green color so it stands out for us. Make it green, and there you go. So, now the green-shaded area will be our resistance. So, if you do decide to buy it into the blue-shaded area, you know of course that this is going to be resistance.
What are we going to need to see to see a breakout and a continuation of the uptrend? A push through that resistance, just like it did here with the blue-shaded area. Now, all of that of course changes and the risk in any buys is that it breaks back down underneath that blue-shaded area and continues to go lower. So, if you decide to buy it today into the blue zone in the direction of the trend, above the trend line, you’re targeting from the blue zone back to the green zone or higher. If you are looking for a sell today, which there’s no real clues to reversal and selling indications yet, then back into the green zone potentially has a low risk, high reward selling opportunity or maybe a breakdown underneath the red trend line and the blue-shaded area becomes your sells.
But I think buying right now in the direction of the trend is probably your best opportunities here for this currency pair, which would be into the blue zone or above the green zone for a continuation of the uptrend. A new green arrow of course will give you confidence in that trend direction. We don’t have a new green arrow, so over the next several hours, we’ll be watching for a new green arrow to pop up. Buying in the direction of the trend, into the blue zone, above the green zone, or potentially a breakdown of that gives you an opportunity for reversal and a turn back down underneath the blue zone and the red trend line for reversal for the NZDUSD.
