The NZDUSD has tumbled lower on the back of the better Non-Farm Payroll today. The move lower really started yesterday when the 200 hour MA held once again (7th and 8th times this month!) The move got it’s big push after the weaker data.

The pair is now back below the 100 hour MA (blue line in the chart below) and trend line support at the 0.7815 and 0.7798 levels respectively (see hourly chart below). The next targets come in against the lows for the week. A break below will next target the lows from 2013 at the 0.7682.

Where is risk now?

What was support (the trend line) – now becomes resistance (RISK DEFINING LEVEL). So that makes the 0.7798 (the broken trend line) and the 100 hour MA (blue line in the chart below) the risk levels. Stay below and the bears remain in control.

The NZDUSD is back below 100 hour MA (blue line ) and trend line. This is not risk for shorts.

The NZDUSD is back below 100 hour MA (blue line ) and trend line. This is not risk for shorts.

Is there a closer risk defining level to stay below?

Looking at the 5 minute chart, the trend move lower on the report has the 0.77857 -0.7800 as the 38.2-50% retracement area (yellow area). In a trend like move, I will look for corrections to find sellers against this area. If the price cannot get above this area, it says to me the sellers remain in control. If it moves above, it says to me that most of the sellers after the number are now losing money. They MAY get scared going into the weekend. So it could lead to more buying.

Patient traders who may want to get in from the short side, should show up around the 38.2% with a stop above the 0.78000. If you want to risk more, then use the 100 hour MA.
The point is, the risk from the 5 minute and the daily chart are both targeting the 0.7800 level as RISK now. Shorts are in control.

The 5 minute chart shows resistance at 0.77857-0.7800

The 5 minute chart shows resistance at 0.77857-0.7800

What about the potential reward?

If you look at the weekly chart (and believe that RBNZ and Governor Wheeler want a lower NZD), the next major target comes in at the 2013 lows at 0.7682 -96 area. That is where I see the pair going barring a move above the aforementioned levels. It is an attraction that technically we should test.

Can it go farther? Sure. The pair likely has plenty of carry traders in it, and if those traders get squeezed, a move toward the 0.7455 low from 2012 can not be ruled out, nor a move toward the 38.2% area over the long term.

I have been wrong before but the break below the support today is telling to me The holding of the 200 hour MA was telling to me. If the price cannot go higher, it should go lower. Stay below the resistance and that should continue to happen.

Longer term, there is room to roam for the NZDUSD if the shorts remain in control.

Longer term, there is room to roam for the NZDUSD if the shorts remain in control.