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I’m going to begin the day today on the New Zealand Dollar versus the US Dollar [NZDUSD]. I’m starting out here on the Monthly Chart because it’s important for us to recognize the historical levels that this currency pair is reaching into recently. Follow it all the way back in time to the left-hand side of the chart. You go all the way back into the 1990s, the early 1990s, and you could see that the levels that we’re reaching are quite historic. We haven’t seen these levels in quite some time.
So, let’s go ahead and zoom it down to the Weekly Chart. Just get a little closer view of the recent highs that we’ve seen. I have two vertical lines here on the chart. The first line coming here right around April 11, 2013. So, just about a year ago, we challenged here, where this pink-shaded area is and the first bottom red horizontal line challenging right here, right around the 0.8675-level. And then you go back a little bit further. You go back into July of 2011 on the left-hand side of the chart. You could see the market challenging the 0.8800-level. And this last high that you see up here is the highest high we’ve seen, again, going all the way back until the early 1990s. So, historic price levels here.
Over the recent days, we’ve been studying the fact that the market was finding a difficult time breaking above this last resistance high from one year ago. Well, over the past 24 hours, we’ve seen the market pressure through that high and even spiking as high as the mid-0.8700s. So, let’s go ahead and go down to the Daily Chart. Get a closer view of the current market. And you could see there’s several days’ worth of candles challenging underneath the 0.8675, 0.8685-level, and then repelling back down towards the 0.8500s.
Now we’ve seen another challenge and today’s candle actually opening above those last resistance highs. And I think that’s significant, because if you go down here to the bottom, where it found support the last time, the yellow-shaded area here. Follow it back in time. You could see historical resistance. I have it circled here in the orange circle. Historical resistance helped us identify that yellow-shaded area of support.
Well, if you put a similar circle around these resistance here, that helps us identify those as a potential support. So, these resistance here now becoming a support now that the market is above that price level. Of course the Forex Black Book trend bar is green, as it’s been going up over the past several weeks.
Let’s put one trend line here. Let’s take a trend line from this low right here to this low here, just before the high, and you could see of course we are in an uptrend. That’s not too hard to see, recognizing higher highs and higher lows. The only thing that’s going to give us a clue to a change of that trend would of course be a breakdown of that trend line, but of course new lower highs and lower lows would tell us that the trend is changing. For the time being, the trend is up and that’s the direction we’re going to continue to focus our efforts in for the NZDUSD. Now especially that we’re above that last resistance high. And as we know, the next resistance high is potentially 0.8800 – the last resistance that we’ve seen going all the way back into the 1990s.
Let’s go ahead and take that information down to the 4-Hour Chart. And here, over the past, again, 24 hours, 36 hours, we’ve seen the market push above the pink-shaded area, above the orange-shaded area, those historic resistance levels, and now becoming potential support. So, what I’m looking for today is support here, just above this orange-shaded area and above this pink-shaded area. 0.8675, 0.8685 becomes our support for the day today.
So, let’s go ahead and put an arrow here. This is our support for the day today. As long as it holds above here and we still continue to see the patterns of higher highs and higher lows, there’s potential for it to rally higher. Now, I would be a little bit cautious because we are seeing potential clues to reversal. We see a little candle body with a longer wick on the top. The shooting star candlestick. We could even begin classifying this next candle as an engulfing candle. So, a little bit of caution on buying here into this support, but definitely a possibility of support here and a continuation of the uptrend. The only thing that’s really going to give me pause for buying would be a breakdown of this orange-shaded area, the pink-shaded area, and the last lows.
Remember: an uptrend has higher highs and higher lows, and a downtrend has lower highs and lower lows. Clearly, over the past several weeks, the buyers have been in control of this currency pair, so definitely watching for a new opportunity to buy it. If you take a look at the Forex Black Book trend bar at the bottom, it has been green, so that means you would’ve been wanting to buy on any new green arrow or green signal, and our lest several green arrows. You could see two over here into mid-March and one right here into early April. We could see the green arrows signifying pretty decent buying opportunities in the direction of the green trend bar.
I don’t think we have an opportunity to see a new green arrow now. If you notice where those green arrows came, they came after a significant dip lower and then a rally higher. Significant dip lower and then a rally higher. So, we would need, first off, a significant dip lower before we could even get a new green buy signal with the Forex Black Book. But coming back to the current timeframe, watching for support to develop here into this area between the red and the black line. 0.8675, 0.8685 will be our main focus today. Support there. We look for a challenge or charge all the way back up toward the 0.8800-level and the last resistance high that we’ve seen here on the chart. The only thing that changes our perspective for this pair is if we see a change of the price pattern. We see lower highs and lower lows. Then we begin focusing on reversal for the NZDUSD.
