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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 here on the Daily Chart. We’re going to take a look at three different trends today on the Daily Chart. You, first off, take a look at the black trend line. That’s the longer-term trend line coming from all the way back here into August of 2013, so just about a year ago we began what is an uptrend here for the NZDUSD, down at the bottom of the black trend line. It connects here with this low here into February of 2014, and what’s most interesting about that black trend line is coming up here to the top right-hand side of the chart. The current market price now approaching that black trend line as an area of support for the NZDUSD.
So, the black trend line. The longer-term trend line. Market coming down to test it as support. Red trend line is a little bit shorter. It starts here in February, so that’s the beginning of the trend line at the beginning of this year, connecting with the low here into beginning of June, and we could see the market already pressing through that red trend line a couple of days ago underneath the red trend line, underneath the green-shaded area as it continued to pressure lower.
And lastly, the third trend line that we’re looking at is the blue trend line. That’s the shortest-term trend line we could see coming from the highest high up here at the top of the chart and just representing the downward movement that we’ve seen since capping out up here at the high on July 11, so about three weeks ago we saw it cap out at the highest high and we’ve been going down ever since.
Probably the most important trend line, I think, that we’re going to pay attention to today will be the black trend line and the support that will be likely expected as it challenges down into that black trend line and that longer-term trend. Let’s go back in time along that purple-shaded area. The purple-shaded area representing historical support and resistance. I highlight them like that so we could see where they are. You follow it back in time. You could see the last time that we challenged this purple zone we found support, and that was the reversal it needed to go back up in the direction of the longer-term trend. So, back into June, beginning of June, we saw it find support into the purple zone and went back up.
You follow it back a little bit further in time. You go back here into March. You see support on top of it. You go back here into January. You see resistance. A spike just up underneath that purple-shaded area as resistance. You see some resistance back here in November. You see congestion and support right on top of that purple-shaded area back in October of 2013. You could see that on the left-hand side of the chart. And once again, resistance back in September of last year. We’re looking into resistance under the purple zone.
So, we could see historically the purple-shaded area, historical resistance and support along there, so it’s not too hard to expect that’s what we’ll see today. I’m actually going to take one of the Fibonacci ranges off that we have measured here, and I’ll put it back on in a moment, but taking that off, the Fibonacci that you see measured on this chart right now goes from the low here. At the beginning of the year, back in February, the low where the black X is. Taking Fibonacci retracement measurement from that low to the highest high on the chart puts the 50% retracement level at 0.8442. That’s the top of that purple-shaded area and right there at the black trend line. So, clearly this is shaping up to be a pretty strong support here right into this area where the arrow is for the NZDUSD today.
So, as the market approaches it, we’ll expect support there based on Fibonacci also. We can even take Fibonacci. Let’s just see what this is going to look like from the low of the black trend line to the current highest high on the chart, and just underneath the purple-shaded area is where the .382 Fibonacci of the longer trend range sits, just underneath the purple zone. So that’s confirming some support into there.
Interesting here. The green-shaded area. Green-shaded area just above the current market, underneath the red trend line and the blue trend line. Now we see two Fibonacci ranges or levels of those two ranges sitting there. The .382 of the shorter range from the black X to the high and the .236 of the longer range from the lowest low to the highest high. We could see those matching up there right into the green zone. So, let’s put one more arrow showing us where our current resistance is. Let’s grab this arrow and bring that arrow right into the green zone. So, that’s our resistance based on Fibonacci, historical support and resistance, green-shaded area, and the blue and the red trend line. So, resistance and support now identified here on the NZDUSD.
Let’s actually zoom it in here on the Daily Chart. We get back in closer. We could see where the purple zone is. We’ve already discussed the potential support there into that purple-shaded area, and for whatever reason I just moved that trend line a little bit. Let’s bring this arrow over a little bit. Let’s say that if it gets under that black trend line and that purple-shaded area, of course we’ll expect it will continue to go lower. Back above the green-shaded area, we would expect a reversal to go back up.
So, what do you do with all this today? Obviously and clearly the bears are in control. The sellers are in control of this currency pair. I believe if you’re going to do anything with the NZDUSD today, you’re selling. You’re selling under the green zone, into resistance. You’re targeting the purple-shaded area. I think your best lowest-risk opportunity is selling as close as possible to the green-shaded area, targeting the purple-shaded area, which is 0.8447. We could see something very similar to that over here on the left-hand side.
Look at the similarities between the candle bodies. Current candle bodies. Today and yesterday, and back here on the left-hand side, right here into May 30. Take a look at this. We saw a red candle go underneath, a small candle open and close under the green zone, blue candle, and then boom, we went right into the purple-shaded area. Look at the similarities that we see going on here. So, just like over here, as long as it’s under the green zone, we’re targeting the purple zone as our next support. Then of course if you’re looking for a buy scenario, the purple-shaded area, the black trend line, the Fibonacci there becomes an opportunity.
One last Fibonacci before we wrap this up. Let’s take Fibonacci from here to the highest high. The low here at the red trend line to the highest high. Taking Fibonacci in that manner puts the .886 fib at 0.8450. That’s the top of the purple-shaded area again. So, that clearly is our support target. Green-shaded area is our resistance target. If we’re looking to sell it, we’re selling green-shaded area, targeting the purple zone. If we’re looking to buy it, we don’t buy it unless it reaches all the way down to the purple-shaded area today for the NZDUSD.
