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I’m going to begin the day today on the New Zealand Dollar versus the US Dollar [NZDUSD]. Now, it’s important to note that yesterday we did have some news out of New Zealand – interest rate statement – that did cause a change in the price action that we’ve seen over the past few days, so we’ll be taking a look at that during this video today, but important to remember that as we go through this analysis.
Going back quite some time now, we’ve been in an uptrend for the NZDUSD. We can even just go back here to the beginning of this year, February of 2014. We started down here at the bottom of the red trend line. We started seeing a rise, a little bit of a dip here into the beginning of June, challenged that red trend line again, came back up, challenged historic resistance highs that we’ve studied in the Trade Room over the past several weeks, and now we’re back down the third time and third attempt into that red trend line. So, that red trend line helping us identify a critical area of support now that the market has fallen down into there.
We go back along that green-shaded area, where that trend line comes into place, and we’re looking between the 0.8560-level and 0.8520. Between 0.8560 and 0.8520 is highlighted in green. Follow it back in time. We could see some congestion right here. We could see some support right here, support right here, congestion and support right here back into March, and then even going back further on the left-hand side of the chart, we could see historical resistance back in October of 2013. So, the green zone is our support zone based on historical support, resistance, and congestion, and we also have that red trend line coming up from the bottom of the chart.
One other item that I want to point out here on this chart is if I take a little black X and put it right here, where the trend line connected in the middle of the trend there, we could see that black X. Taking Fibonacci from that low to the current resistance high, the highest high on the chart, puts the .618 Fibonacci retracement level right at 0.8566. That’s, again, right at the top of our green zone. So, now we have Fibonacci at 0.8566. .618 Fibonacci retracement level, we have the red trend line coming up from the bottom, and we have historical support and resistance along this green-shaded area. So, critically this green zone will be our support for the day today.
One last thing. Let’s go ahead and take Fibonacci also from the low here at the bottom of the red trend line. I’m not sure what this is going to look like, but take it from there to the current resistance high. Puts the .382 Fibonacci retracement level right at 0.8531. That’s the bottom of our green zone, so that’s very interesting for us as we go through this analysis also. Let’s make sure it gets connected exactly to that low right there.
Now let’s zoom it in one time here on the Daily Chart, just to get a closer view. Now we can see where those Fibonacci levels come into place on both sides of the market and we could see the 0.8566-level, .618 fib. 0.8534 is the .382 of the longer trend range, so the green zone holding our support today. Let’s go ahead and put a couple arrows. So, as long as it stays within or above that green zone, red trend line, those Fibonacci levels, there is a high probability of support, and we’ve already seen that so far today. If this market can break down through that green zone, we’ll likely look for a continuation lower.
So, that’s our first level that we want to pay attention to. The next level we’re going to pay attention to will be this yellow-shaded area. The yellow-shaded area just above the market. We could see there’s a 50% Fibonacci of this short trend range, the previous uptrend range sitting there at the bottom of the yellow zone. Top of the yellow zone is where the .236 of the longer trend range, uptrend range was that we just looked at a moment ago. Follow the yellow zone back in time. You could see the support and congestion here. You see resistance here, and even on the far left-hand side of the chart, resistance into that yellow zone. The next zone of resistance would be likely closer towards the 0.8650 to 0.8665-level, closer towards that pink-shaded area that you see here, and you could see that period of congestion right here on the left-hand side of that uptrend.
Let’s take one more Fibonacci retracement level. Let’s go from the high on the chart. The highest high on the chart, down to the current support that we’re seeing right now, where the market came to a stop just a few hours ago. We find the .236 right there in the middle of that yellow-shaded area. So, that becoming a critical resistance for the day today. As long as it holds underneath it, potential for this bearish trend to continue to pressure down in that direction. So, for the sellers, if you’re looking for a new sell opportunity today, I believe that would be back into the yellow-shaded area, where our Fibonacci levels are coming into play from multiple different trend ranges and into historical support and resistance that we see highlighted back in the past. So, if you’re going to sell it, that becomes the place to sell it.
I wouldn’t sell it on top of the green-shaded area because there’s a high probability of support there. The other opportunity to sell it would be a breakdown of the green zone and our historical support and resistance and the trend line of course for the NZDUSD.
Let’s take all of that information down to the 4-Hour Chart. Not really going to change it a whole lot because all those shaded areas are still important levels to watch. If you’re going to sell the NZDUSD today, of course challenging back into resistance. You know, that may be a little bit higher and we could possibly adjust that later today in the Trade Room, but at least into the 0.8620, 0.8630-level, maybe even into 0.8640, we would look for resistance for the NZDUSD today. The support is going to be the same right here at the 0.8565 to 0.8535-level. That’s the green-shaded area. Anything above that green-shaded area, we’re looking at support. So, resistance up here could be the yellow zone. Maybe as high as the pink zone. We’ll hone that in a little bit later in the Trade Room today. A breakdown of the green zone continues to go lower.
Forex Black Book trend bar of course is red, so that gives us the opportunity to look for new red arrows, so actually we’d prefer it to go back up. Yellow zone or pink zone. Then give us a new red arrow. One more trend line here. Let’s just throw a trend line just about like this right here, just showing us. In fact, I don’t like that one as much as I like it going right here. I’ll change it to the blue color so it’s different than the other trend line. So, the blue trend line now is our bearish trend line, representing our last two resistance highs, so that would be, again, back up there towards the yellow or the pink-shaded area.
So, sellers, wait for a rally back into resistance before you decide to sell it. Not really particularly selling it on top of the green zone. However, there could be several folks out there that are looking at buy scenarios, and I suggest the best buy scenario here for the NZDUSD today would be into the green-shaded area and the red trend line, providing the lowest risk, highest reward possible opportunity today for the NZDUSD.
