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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, I’ve zoomed far out so we could see back in history. We could see that recently we’ve been challenging into the 0.8700-level, and the last time we were into this zone of resistance was all the way back here into April of 2013, so it’s been about a year since the last time we challenged these resistance highs.
So now let’s go ahead and zoom in so we could see the most recent timeframe again. We could see the challenge of the recent resistance highs. I’m going to actually zoom in one more time. We could see the challenge of those highs up there. The orange-shaded area. The 0.8675, 0.8685-level challenging over the past several weeks and unable to break above it.
Now, I see that we pushed above it here, but I’m typically looking for a clear open and close on the Daily Chart to be a real break of a resistance level, and we never saw an open and close above the 0.8700-level, and then it started working its way back down. If you were here with me last week, then you know that I was taking sells into the 0.8675, 0.8685-level, and profit was captured as it pushed back down here towards the green-shaded area into the upper-0.8500s.
And over the past several days though, we’ve been settled out underneath this zone. The green-shaded area here. The green-shaded area goes between 0.8580 and right about the top side of that is back into the 0.8600-level. So, about 20 pips highlighted in green that we have found resistance over the past three or four days. If we can break above there, we’ll likely challenge back into the pink-shaded area. Holding at this resistance, we’re back to the yellow-shaded area.
I’ve also placed this red box here on the chart to represent somewhat of a range that’s been developing over the past several days. We could see the resistance highs at the top, the orange-shaded area, and the resistance highs at the top of that box. We could see the support lows into the yellow-shaded area down here at the bottom of the box. As long as it holds within that box, within this range, there’s potential to find support at the bottom or resistance at the top.
We’ve also broken underneath this red trend line. You could the trend line coming from the low down here into the mid-0.8000s. Right about 0.8050 or so, capping out up here at the highest high into the 0.8750-level. Connecting that trend line within the lows prior to that resistance high, we could see the market broke underneath there, challenging now back into resistance underneath the trend line. So, that’s important for us today. As long as we stay underneath that trend line, there’s potential for us to continue to pressure back down.
Remember: an uptrend has higher highs and higher lows. A downtrend has lower highs and lower lows. And that will be the clue to a trending pattern. The black trend line here represents the last two support lows that we see within that uptrend. Just connecting the last two support lows, we could see we’ve challenged pretty close, but not exactly all the way down to the 0.8535, 0.8540-level, that yellow zone, and that black trend line.
So let’s go ahead and put a couple of arrows to give us our expectations for the day today. Here at the bottom of the box, the yellow zone, our last supports and that black trend line. As long as it stays above it, there is potential support for it to go back up within that box and the longer-term uptrend. If it ever breaks down underneath that yellow zone, we’ll look for it to begin working its way back down in a downtrend. Top of the box, of course, becomes resistance, and that’s all the way back do the resistance highs. And of course above there, we’ll look for it to continue to pressure higher.
Now, within the range, within this red box here, we have a couple of other resistance levels. The green zone of course, over the past three days, holding as resistance. The next zone would be the pink zone. It happens to be very close to the red trend line also, into the 0.8630, 0.8640-level, into that pink-shaded area. So, those are some of the areas that we’ll want to pay attention to.
One last thing, or actually two last things on the Daily Chart. Fibonacci from the low to the high of the red trend puts the .236 fib right at 0.8580. That’s right here at the bottom of the green-shaded area. We’ve challenged underneath it, challenging back above it right now. If we can stay underneath it, we’ll likely look for that fall to the yellow zone. If it gets back above it, turning back higher to the pink-shaded area. Forex Black Book is red. We could see the trend bar at the bottom of the chart is red. It gives us a sell bias for the current market on the NZDUSD.
Let’s go ahead and take all of that information down to the 4-Hour Chart, and we could see the challenge of the green-shaded area once again here on the 4-Hour Chart. We could see the pink-shaded area was our last resistance that we could see over here on the left-hand side. If we stay under the green zone, we already know that we’re going potentially back down to the yellow-shaded area and our last last support lows that we see over here on the left-hand side.
Let’s also take one other fib here on the chart. Let’s go from the highest high to the current support low. Highest high to current support low, we find the .236 fib at 0.8599. We could call it 0.8600 of this last downtrend leg. .236 at 0.8599. That’s where our current resistance is. So, I’m actually going to move this arrow down here. Staying underneath 0.8600 today, potential for us to see that fall back down to the yellow-shaded area. Getting above 0.8600, we look for the climb. Let me move it over just a little bit. We look for the climb back to our next resistance, which would be the pink-shaded area.
So, this is a critical point for the day today on the NZDUSD. Staying underneath 0.8600, we look for the fall back to the yellow zone. That’s pretty much what happened right here for the NZDUSD. So, staying underneath 0.8600, we’re back to the yellow zone. Breaking above 0.8600, we’re back to the pink-shaded area. That becomes our next selling opportunity in the direction of the downtrend, the break of the red trend line, and the Forex Black Book indicator. We’re looking for sells on rallies to resistance. A new red arrow would also give us an opportunity to sell it. I expect that if it does challenge the pink-shaded area, we’re look for that new red arrow. That also happens to be the .382 Fibonacci retracement level right at 0.8627, the bottom of that pink zone for the last downtrend.
So, clearly the pink-shaded area becomes our next opportunity to sell if we break above 0.8600. So, your opportunities to sell today: right here at the 0.8600-level, being watchful for the breakout above 0.8600. We likely challenge back to the 0.8630, 0.8640-level, into the pink-shaded area. That becomes our next opportunity to sell it. I think the higher it gets, the lower the risk, the higher potential reward comes. I also would expect that closer to the topside of the red box here becomes a better opportunity to sell too. So, I think clearly back here into the pink zone would be the better opportunity, but potential short-term opportunities here at 0.8600, targeting, both times, back down towards the yellow-shaded area for the NZDUSD today.
