- I recognize immediately that we had gotten oversold, which is something that I've talked about over the last couple of days.
- We have since seen a little bit of a bounce, and therefore I think we've got a situation where the PMI numbers in the United States coming up weaker than anticipated, or I should say a bit mixed, probably has people looking at this through the prism of a market that is going to continue to be very noisy, and perhaps continue to cause volatility.
With this, the NZD/USD market is a bit overextended, and therefore, I think a bounce makes a lot of sense. If we do bounce from here, the 0.6050 level is an area that has been important multiple times, and I do think that would be your target. For what it is worth, we have had the 50-day EMA cross below the 200-day EMA, kicking off the so-called death cross.
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The death cross of course is a very bearish turn of events from a technical analysis standpoint. And therefore, I think a lot of people will continue to look at this as maybe a bearish market, but I do think in the very least we need to see a little bit of a recovery because the New Zealand dollar has fallen off so hard. Underneath current trading the 0.59 level should continue to offer plenty of support.
So, I think all of this ties together for a short term opportunity. That doesn't mean that it will be easy for the New Zealand dollar to rally from here, but I do think that it makes more sense than not due to the fact that the U S dollar has strengthened so rapidly that sooner or later there will be a bit of profit taking, and therefore we are going to see a bit of a move to the upside in general. This market has a lot to do in order to prove itself, but we look as if we are trying to start that process.
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