- The New Zealand dollar has been crushed during the trading session on Tuesday as traders came back to work from the United States.
- The 0.60 level continues to be massive resistance.
- Despite the fact that we have lost roughly nine tenths of a percent, the reality is that this doesn’t necessarily change anything.
It just suggests that we are still very much stuck in the same consolidation range we have been in for a while. This would be between the 0.60 level and the 0.5850 level. It is worth noting that the 50-day EMA has just crossed above the 200-day EMA in the last session or two. That is the so-called golden cross. So longer-term traders may be looking at that as a potential signal to buy and hold. That being said, they need to clear the 0.6050 level to be sure that we are out of this area.
Was Monday a Harbinger?
Remember on Monday we had formed a shooting star, and I said that could be trouble, but I also suggested that perhaps part of what was going on was a simple lack of volume coming into the picture. After all, Monday was Memorial Day, and now that the traders are back, it looks like they’re decidedly pro-dollar, at least for the moment. I think we have a situation where we probably just go back and forth and cause a lot of chaos to trading accounts who are not trading the range.
If we break down below the 0.5850 level, then I think it’s likely that the New Zealand dollar will drop to the 0.5750 level. On a break above the 0.6050 level, then we could go as high as 0.6350, although that’s a longer term move. As things stand right now, we’re still in the process of working off some of the excess froth from that vicious bounce about a month and a half ago.
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Christopher Lewis has been trading Forex and has over 20 years experience in financial markets. Chris has been a regular contributor to Daily Forex since the early days of the site. He writes about Forex for several online publications, including FX Empire, Investing.com, and his own site, aptly named The Trader Guy. Chris favours technical analysis methods to identify his trades and likes to trade equity indices and commodities as well as Forex. He favours a longer-term trading style, and his trades often last for days or weeks.