- The New Zealand dollar has been pummeled during Friday trading as we continue to see the US dollar strengthen against almost everything else.
- With this being said, the market is likely to continue to see a lot of noise, but we are getting close to the 0.58 level, and this has been a significant bottom in this market for a while.
If We Drop From Here…
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So, if we break down below there, we could see the NZD/USD drop to the 0.55 level. It wouldn't surprise me to be honest with you. I know a lot of retail traders will be looking at this and saying, hey, this is some value that we can buy. And this is not me telling you that it can't bounce. But what it is telling you, and what I am telling you, is that although we are at a major support level, there are reasons why the chart looks like this.
The Australians have produced a less than expected by two tenths of a percent quarter-over-quarter GDP. That has a direct effect on New Zealand. This means that New Zealand is probably slumping as well. Furthermore, the United States economy continues to outperform pretty much everything. And New Zealand won't be any different. China is a bit sluggish as is most of Asia right now. And New Zealand is highly levered to what goes on in Asia. This could be an area where you would see an excellent buying opportunity, but you have to have a reason for it.
That's one of the things that technical analysts often forget is that it's great that there's a hammer there or whatever the situation may be, but there needs to be an actual reason for somebody to want to buy the New Zealand dollar. Right now, I think we meander sideways at best. We are closing towards the bottom of the candlestick, so that's not a good look either.
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