Ultimately, this is a situation where we have formed several inverted hammers in a row, so it’ll be interesting to see how this market ends up at the end of this session.
- The NZD/USD has rallied a bit during the trading session on Monday, as the 200-Day EMA has offered a significant amount of support.
- At this point, the market is likely to continue to see a lot of noisy behavior, with the area between the 200-Day EMA and the 0.64 level causing a lot of choppy behavior.
- This does make a certain amount of sense since the world is right now trying to figure out what’s going on with the economy, a lot of people will be looking at the US dollars trajectory, and that of course the commodity currencies such as the New Zealand dollar.
Looking at this chart, you can see that I have both 0.64 and 0.65 marked. This is an area where I expect to see a lot of noisy behavior, as we had a major wipeout candle form from that area. In fact, we have formed a little bit of a “double top”, and therefore it will be interesting to see just how much trouble there could be in that area. If the market were to break above the 0.6550 level, then we will clear that area and perhaps go looking to the 0.68 level.
If we break down below the 200-Day EMA, we will start to look at the 0.62 level as a potential support level. If we were to break down below that level, then it’s likely that we go to the 0.60 level. The 0.60 level is an area that is a large, round, psychologically significant figure, but I think there’s probably more interest in the 0.58 level. In other words, I would expect a bit of a drop from here, if we get the ball moving.
In the short term, the New Zealand dollar still will be highly correlated to the commodities markets and course world growth. Ultimately, this is a situation where we have formed several inverted hammers in a row, so it’ll be interesting to see how this market ends up at the end of this session. If we do give up the gain, then I think it shows that we still have quite a bit of downward pressure. All things being equal, this is a market that I think sees a lot of choppiness.