The New Zealand dollar broke down a bit during the Tuesday session, slicing through what would be thought of as a minor trendline, showing just how weak the Kiwi has become as of late. With the Royal Bank of New Zealand recently suggesting that the next move might be an interest rate cut, the New Zealand dollar has taken it on the chin.
The trendline started at the beginning of the year, and now that we have sliced through it it’s likely that we will continue to grind down towards the 0.67 handle in the short term. The real question is whether or not the 0.67 handle will hold. If that barrier does not hold up, then it opens up the door down to the 0.66 handle which was the scene of a major turnaround in late December of last year. (Forming an ascending triangle.)
To the upside one would have to think that the previous trendline should offer resistance, currently around the 0.6780 level, and extending resistance to the top of the candle stick from the Monday session, reaching towards the 0.6825 handle. In other words, at this point for short-term traders it looks very likely that you can continue to sell rallies on signs of exhaustion as this move has been so definitive. All things being equal, this is probably going to continue to be a very short term driven market, but I’m the first person to admit that one of the biggest concerns here would be whether or not the US dollar can stop its relentless march higher on the US Dollar Index. Watch the 79 level over there, because if we break above there it’s very likely that this pair will continue to show greenback strength just as the other pairs will. Now that we have a failed ascending triangle, there certainly is a lot of bearish pressure here.
The trendline started at the beginning of the year, and now that we have sliced through it it’s likely that we will continue to grind down towards the 0.67 handle in the short term. The real question is whether or not the 0.67 handle will hold. If that barrier does not hold up, then it opens up the door down to the 0.66 handle which was the scene of a major turnaround in late December of last year. (Forming an ascending triangle.)
To the upside one would have to think that the previous trendline should offer resistance, currently around the 0.6780 level, and extending resistance to the top of the candle stick from the Monday session, reaching towards the 0.6825 handle. In other words, at this point for short-term traders it looks very likely that you can continue to sell rallies on signs of exhaustion as this move has been so definitive. All things being equal, this is probably going to continue to be a very short term driven market, but I’m the first person to admit that one of the biggest concerns here would be whether or not the US dollar can stop its relentless march higher on the US Dollar Index. Watch the 79 level over there, because if we break above there it’s very likely that this pair will continue to show greenback strength just as the other pairs will. Now that we have a failed ascending triangle, there certainly is a lot of bearish pressure here.