NZDUSD pressured today. Has it gone too high?

• gregmikefx
• October 30th, 2009

The NZDUSD is pressured today after rallying strongly yesterday on the back of the stronger US GDP. The pair has been trenling up for most of 2009 on the back of higher commodities and global recovery theme.  The geographic proximity to the growth areas of the world has also benefitted the pair. 

However, the price has been under pressure of late and the Reserve Bank of New Zealands reluctance to talk about raising rates like its neighbor Australia, has the currency on the defensive.  In short, the pair could have gone too far too fast and is due for a correction.

From a technical perspective, the price is below the trendline at the 0.7264 level.  Watch this level on the upside today.   If the price can stay below this level and close the week below, then the target from a longer term perspective could extend down to the 100 day MA at the 0.6834 level currently.

Now this longer term and requires that the price stay below this trendline to start (and then being able to reach interim targets along the way) but it is worth noting on a Friday.

Shorter term, the price remains below the 100 hour MA at the 0.7362 level currently. This is bearish from an intermediate perspective.

The price is also below the 100 bar MA on the 5 minute chart (BLUE LINE in the 5 minute chart above) at the 0.7286 level currently (and moving down).  As a result, the daily, hourly and 5 minute chart are all giving a negative bias.

For a trade, as long as the price remains below 0.7264 and below the 100 bar MA on the 5 minute chart (at 0.7285 and moving lower), the downside is preferred with the thought that the low from Thursday is the next target (0.7160).  A break below that level could increase the downward momentum with the right combination of intermarket moves (i.e., lower commodities, lower stocks, and continued talk from RBNZ regarding the negative effects of the strong NZD$).

Like all the trades we analyze, the moves are dependent on completing the technical steps along the way, and keeping the bias to the downside.  IF that bias changes, the trades are covered. SO monitor the key technical levels along the way.

The information in this blog post represents my own opinions and does not contain a recommendation for any particular security or investment. I or my affiliates may hold positions or other interests in securities mentioned in the Blog, please see my Disclaimer page for my full disclaimer.

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