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I’m going to get started today on the New Zealand Dollar versus the US Dollar [NZDUSD]. I’m going to start here on the Weekly Chart and I’m zoomed out way out so we could see further back in history. At this view here on the Weekly Chart, we could see all the way back into 2005 and we can see that the levels that were at our historic levels, their major resistance levels that we haven’t seen for quite some time prior to this little blue circle at the top of the chart back in 2011. We hadn’t sen this currency pair this high since 2005, and actually it goes all the way back to the 1990s, since the last time we were here into these price levels for the NZDUSD.
We could see, back in 2011, the highest high on the chart is this little blue circle at the very top of the chart, close towards the 0.8800-level for the NZDUSD. Recently, back in April of 2013, so a little bit more than a year ago, we saw the market challenge here into the 0.8700-level and, again, most recently, over the past few weeks, we’ve seen it challenging back here into the upper 0.8600s, towards 0.8700. So, historical major price levels here for the NZDUSD.
Let’s go ahead and begin zooming in here on this price zone. We could see the, of course, historic resistance into July of 2011. The blue circle. Top left-hand side of the chart. Then, of course, here in April of 2013, the last time we were here and just over the past few weeks. Once again, we’re zooming in as we get closer and closer to the current market. Let’s zoom in one more time here on the Weekly Chart, and we could see, again, there is our current area that we’ve been stuck in.
We’re looking on the Weekly Chart. So, if you count last week, seven weeks now we’ve been stuck inside this red box that we see up here at the top right-hand side of the chart. I drew this in here several weeks ago, and we’ve been looking at resistance at the top, support at the bottom over the past six to eight weeks for the NZDUSD.
Now let’s go ahead and take all of that information; begin going down to smaller compressions. Let’s go ahead next down to the Daily Chart. And as we get down here to the Daily Chart, again, there is that red box at the top of the chart. We’re going all the way back into March 12, when we got into that red box at the bottom, above the yellow-shaded area. So, since March 12th, we’ve been bouncing around in here.
Several weeks ago we took a buy, or several days ago we took a buy down here into the yellow-shaded area. Was able to capture profit as it continued to pressure higher. If you’re still holding any of those buys from the yellow zone and the bottom of the box, you should of course be protecting that profit as we are challenging the resistance, historical major resistance, as we’ve just seen from the Weekly Chart, here into the upper-0.8600s. Between 0.8675 and 0.8685 is really the area to watch for here on this currency pair.
Let’s zoom it in one more time here on the Daily Chart. And if you go back here, we’re going back into the mid to first part of April, going April 15 all the way back into April eighth. Eighth through the 15th, we could see the market challenging the orange-shaded area, the top of the box up here at the top of the chart, and unable to open and close, clear single candle body, above that price zone, above the 0.8685-level.
Now, of course 0.8600 sits just above that, but underneath 0.8700, you can count this as resistance. And then we go back here into April 1st and even going into late March, we can see, again, resistance up here into that orange-shaded area. So, historic major resistance here. As long as it holds within or under that orange zone, let’s go ahead and put an arrow here. Within or under that orange zone, I’m looking for resistance and potential clues to reversal here for this currency pair.
And interesting enough, the Forex Black Book, even though we’ve seen it going up over the past few days, remained red. Dark red, but red this week. So, if it is going to find resistance and reversal, this is where I would expect it to happen here, between 0.8675 and 0.8685. The orange-shaded area. Top of the box that we’ve been studying over the past several weeks.
The only reason I would change that outlook of course would be an open and close above 0.8685, 0.8700. Then we look for the continuation of the longer-term uptrend. So, at this point, looking at the indicators that we’re seeing here – the box, the resistance, support, the price action over the past several weeks. At this point, there’s no reason to buy this currency pair. I think it’s quite dangerous to buy it at this current point, sitting underneath this resistance. More likely, you’re looking for resistance, clues to reversal, and selling opportunities today. The only reason I would begin thinking about buying it would be, of course, a dip back down into support or a break through this zone of resistance.
So, down to the 4-Hour Chart, begin looking at the next smaller compression. Of course there’s our red box there from all the way out on the Weekly Chart. We could see the orange-shaded area highlighting between 0.8670 and 0.8688. Let’s go ahead and bring these arrows a little bit closer to the market. Again, staying within or underneath that orange-shaded area, I would be looking for resistance and potential indicators of reversal. Only if it gets above 0.8688 would I look for the continuation higher.
Look at the last time we were here. Look at all the candle bodies sitting underneath the orange zone. We saw a red arrow up here, so that, again, gives me confidence in resistance. One last thing. Let’s take Fibonacci. Let’s go with Fibonacci from the last resistance high all the way up here at the top left-hand side of the chart, down to the current support low, and we find the .786 fib sitting at 0.8695. That’s just a hair above our orange-shaded area. So, again, that gives us a clue to potential resistance, into the .786 fib, 0.8695, just above our orange-shaded area, the Fibonacci of the previous downtrend leg.
So, all in all, resistance right now. No reason to buy it at the current moment. I think, if you’re going to buy it, you’d probably want to wait for it to dip back down at least to the 0.8640-level, if not 0.8625. The pink-shaded area you see down here. That becomes your next potential support. The pink-shaded area. Now, if it gets underneath there, of course we’ll look for it to go down, back to the green zone or possibly back to the bottom of the box, but today’s support: the pink zone. Today’s resistance: the orange zone. Sitting under the orange zone, more likely looking for clues to resistance and selling opportunities. Only if it breaks out above here do you look for it to go higher. Your next support, of course, is the pink-shaded area for the NZDUSD today.
