NZD/USD: upward correction was short

October 10, 2014

Current trend

This week, trading in NZD/USD was mixed and the pair was strongly affected by the US fundamental statistics. On Thursday the price had reached two-week highs at the level of 0.7975 after the release of the minutes of the US Fed meeting, which showed concerns of the American regulator about the strong dollar. The regulator has postponed tightening of the monetary policy once again, which was unexpected for the market participants. However, soon after that the pair lost positions after the release of the American labor market information. According to weekly report of the US Ministry of Labour, number of the primary and secondary applications for unemployment benefits fell again, showing positive dynamics. Note also that New Zealand currency continues to be under pressure from the low prices for the dairy products. According to the auction “Global dairy trade,” the price of milk fell by 7.3% over the last two weeks.

Support and resistance

Technical indicators show that the price has broken the middle line of “Bollinger bands” indicator (0.7860) and had potential to decline up to the levels of 0.7790 and 0.7740. MACD indicator also confirms possibility of the decline in price, as its histogram is ready to move to the negative zone and form a sell signal. Stochastic lines are horizontal. They do not give any clear signals.

Support levels: 0.7790 and 0.7740.

Resistance levels: 0.7860, 0.7900 and 0.7975.

Trading tips

In the current situation it makes sense to open short positions at the current price level. Long positions with the target of 1.7975 can be opened if the price consolidates above the level of 1.7890.

Dmitry Zolotov

Analyst of LiteForex Investments Limited 

Publication source
LiteForex information  LiteForex reviews

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