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I’m going to get started today on the New Zealand Dollar versus the US Dollar [NZDUSD]. I’m starting here on the Weekly Chart so we can get a longer-term perspective on this pair, and then we’ll start to work our way down to the smaller timeframes. First off, long-term, this pair has been in an uptrend. We’re going all the way back down to the bottom left-hand side of the chart on the Weekly Chart and we could see we were all the way down there in towards the 0.6600s.
It’s been continuing to climb, as it pushed all the way up into the 0.8800s over the most recent weeks. Now we’ve also seen a little bit of a pullback of that uptrend. As it’s come back down, we’re looking historically for support and resistance to tell us where the market might slow down on the way down, within the previous uptrend. So, we go back in time and I’ve highlighted it here with this red box here, back on the left-hand side of the chart.
You could see this red box. It’s highlighted with blue at the top of the red box and pink at the bottom of the red box, but you could see historically we’ve seen support, resistance, and congestion. Primarily even here in the most recent timeframe we could see a great deal of support over here on the right-hand side of the red box. We could see a great deal of resistance here. So, we see resistance and support offering support. We go back in time all along that pink-shaded area. Resistance and support all along that.
If we get underneath there, and clearly on here on this Weekly Chart we can see that the next area that we would look for would potentially be all the way back down here to the green-shaded area at the middle part of the chart, and that’s all the way down into the 0.7700s and even into the 0.7800s. So, quite a long ways down. If we break through here, if it does do that, and this is great example of how that could work out for us if it does breakdown through there. If it doesn’t, we could turn right back around and start working our way back higher.
The green line that’s here on the chart is a 200 period. If I put my cursor right on it, you could see a 200-period moving average. Simple moving average here on the Weekly Chart. We could see we’re now challenging into that. Let’s go ahead and zoom it in a little bit here on the Weekly Chart, and we could see the market is challenging that 200-period moving average. We could see, again, that pink-shaded area historically over here into November 2013. June, July of 2013. Resistance, support, support on the left. So, again, this is a clear decision zone.
So let’s go ahead and put a couple of arrows here, and again, we’ll refine this as we get down to smaller compressions. Here is support. A breakout underneath it, we would look for the continuation of the current downtrend. That’s really the way it’s going to round out for the day today, and that’s our expectations as we look for new opportunities.
Let’s take it down to the Daily Chart. And here on the Daily Chart there’s the same pink-shaded area. We can clearly see that over the past several weeks, going back to June and July, we’ve been in a downtrend. The blue trend line representing that downtrend. The Forex Black Book trend bar is red, giving us a bearish bias. So, all of that telling us we’re in a downtrend. A few days ago we were looking for potential resistance opportunities to sell this currency pair, and it did, once again, pressure into resistance, into the blue-shaded area. Gave us the opportunities to sell into the 0.8220s. And if you did that, of course you should be protecting profit as you’re sitting nearly a hundred pips of profit now from the sells from the blue-shaded area.
And we know of course from the Weekly Chart that this pink-shaded area will likely be support for this currency pair. And we could see that yesterday and so far today. If it continues to find support, potential rallies back above 0.8140, the top of the pink zone, we potentially look for it back to the blue trend line, the blue-shaded area, and maybe even reversal .If it gets back above there, we could look for clues to reversal.
I don’t think we have that right now. I clearly think that the downtrend is still the main driving force for this currency pair. And a breakdown of 0.8080 or so, 0.7500, the bottom of that pink zone, we look for the continuation of the downtrend. One other thing. Let’s take Fibonacci from the highest high on this viewpoint on the Daily Chart, down to the current low. And in doing that, we find the .236 fib right smack in the middle of that blue-shaded area. So, clearly that is our reigning resistance right now, into that blue-shaded area for this currency pair. And a breakdown here of the pink zone goes lower.
By the way, the .618 fib that you see right here in the middle of the pink-shaded area. You could see over on the right-hand side 0.8115. That comes from the larger compression, but if I zoom it out here, we could probably see. Well, I have to zoom it way out here. We could probably see where it comes from. You could see, starting down here at the bottom of the green zone, the low down there at the bottom of the green zone to the high puts the .618 right there in the pink-shaded area. By the way, that’s where our historical support and resistance is.
So, .618 there. Breakdown of that, easily looking for a fall at least back down towards the 0.7900-level. So, there’s Fibonacci in the pink zone. Fibonacci in the blue zone. Both identified by Fibonacci and historical support and resistance. Clearly a breakdown of the pink zone goes lower. Holding here in the pink zone, like it did over there on the left-hand side of the chart, could even see another rally and potential reversal for this currency pair, like it did the last time we were here for the NZDUSD.
Take it down to the 4-Hour Chart. It doesn’t really change the outlook at all. It just gives us a little bit of a closer in view to all that price action that’s happening here, and I don’t think it changes it. I think if it gets back above 0.8140, which is the top of the pink zone, we look for reversal and we look for it to potentially go back up here to the blue zone. That’s really the way it is. If it gets back above here, find support on top of the pink zone again. Could be our first clues to reversal for the NZDUSD.
If it cannot get back above 0.8140, which is this last little support right here, if it can’t get back above there, we look for the breakdown of the current low and a continuation. If you’re looking for a trade right now at this very moment, it would likely be selling underneath 0.8140 with the risk just above it. That way if it breaks out above it, you’re not holding sells. We do have a good deal of news out of the US coming in about 45 minutes from the recording of this video, so that could affect this currency pair seeing that it has the US dollar in it. So, great deal of news today for the US, so definitely could affect this currency pair.
And of course over the next several hours, we also will be watching the vote out of Scotland. That could dramatically affect the currency markets as we know it. So, we’ll keep watching that and the US news later today. But a breakout above the pink zone, we go back to the blue zone. Underneath the pink zone, we’ll begin the fall in the direction of the trend for the NZDUSD today.
