NZDUSD TO STAGE INTRADAY CORRECTION LOWER IF SPOT BREAKS 0.8510
The NZDUSD is on the rise, as the cash rate expectations from the Reserve Bank of New Zealand increased over time. In the recent interest rate decision, the central bank announced a rate hike of 0.25 points, which lifted the New Zealand dollar across the board. The NZDUSD pair traded as high as 0.8600 recently, but failed to attract buyers above this level. The pair dipped back towards the 0.8520 support level, where the NZDUSD buyers appeared.
There is a critical up-move trend line, as plotted in the 4 hour chart shown below. The up-trend is clearly visible in the chart. The NZDUSD pair has to trade above this trend line in order to keep the trend alive in the medium term. The 0.8510/00 support zone is crucial for the NZDUSD pair, and if the buyers fail to defend this region, then one can expect a sharp down move in the pair. This support level also represents a previous major volume close in the NZDUSD pair.
There are signs of crack emerging for the NZDUSD pair, as some of the key indicators have started bending their back. One of the main indicators, RSI has started showing signs of a reversal in the short term. There is a bearish divergence noted, as highlighted in the chart shown above. However, such divergences need a flush to the opposite direction before reversing.
New Zealand Current Account Figures next
Today at GMT 09:45 AM, the New Zealand’s current account figures will be released by the Statistics New Zealand. The market is expecting an improvement in the numbers. If the data comes out well, then the pair can sustain the break. However, if the outcome disappoints, then the NZDUSD pair can head towards the trend line support area, and could even break it if sellers take control.
I think selling a break could be an option. I would not advise to sell rallies at the moment, as things are not lined up perfectly for that scenario. A classic break and close below the trend line and support level could be a trigger for a short entry. Stop can vary from 30-50 pips, and the target could be around 0.8440 at least.
KEY SUPPORT LEVELS: 0.8540 and 0.8510
MAJOR RESISTANCE LEVELS: 0.8580 and 0.8610
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