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NZD/USD – Double Top or Breakout?
NZD/USD -- Double Top or Breakout?
NZD/USD is at a crossroads today with the latest rally taking the currency pair within 20 pips of its October high. This level is significant not only because the currency pair peaked at that point in October but also because it coincides with the 50% Fibonacci retracement of the 2009 to 2011 rally. While today’s move has taken NZD/USD above its 200-day SMA for the first time since August 2014, it is absolutely essentially that we see the currency pair end a day at least 50 pips above the October high of 0.6897. If that occurs then it will be an easy move to 70 cents followed by a run to 0.7340 if the former level is broken.
With most of the market in holiday mode, today’s move was driven by a recovery in commodity prices and reports that China could increase its budget deficit in the coming year which would mean more stimulus and more support for their economy. We are looking for the New Zealand dollar to outperform in the first few weeks of the New Year which means we are looking for fresh 5 month highs. However the low liquidity break of the 200-day SMA still needs to be proven real