- The first thing I see is that we are rapidly approaching a major resistance barrier in the form of the 0.6350 level.
- If we can break above that level, then it will almost certainly open up the possibility of even more fierce buying in this market, as we continue to go looking to the 0.65 level.
- That being said, we are a bit stretched and the Relative Strength Index is rapidly approaching the 70 level, which of course when the market is considered to be “overbought”, but quite frankly that indicator is just a reason to think that we are stretched, as the reality comes down to the fundamentals lining up.
The size of the candlestick for the Tuesday session of course is rather impressive, but we are getting to the point where I think a little bit of profit-taking will probably come back into the market. With that being the case, I recognize that the market is likely to continue to see a lot of volatility, and therefore I think you need to be cautious about your position size due to the fact that although we look very positive, there is a huge barrier coming up, and that of course will cause some issues.
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Buying on the dips
I believe that the NZD/USD market is a one that you continue to buy on the dips, with the 0.63 level being an area that a lot of people would be looking at, and then after that you are looking at support near the 0.62 level. The 50 Day EMA sits right around the 0.6150 level, and therefore I think that also offers a certain dynamic support level that people will be paying close attention to. If we were to break down below there, then a lot of things would change, but quite frankly the way that the daily candlestick on Tuesday has behaved, it certainly looks as if we are ready to go much higher, and therefore think you have to look at this through the prism of looking for value that we can take advantage of. If we get a daily close above the 0.6350 level, then I think we are off to the races.
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