What levels to look out for on the downside?
Yesterday, the pair was on the up and up but failed to find a break through the resistance levels of the 1 Dec high¹ at 0.6912 (as well as the 76.4 retracement level² of 0.6915).
From there, it was a move lower and the pair broke through the 200-hour MA but once again stalled at the 5 Dec lows³ of 0.6872 (with some additional support from the 100-hour MA).
But once the pair cleared the lows earlier today, it's a straight move downwards and it's now trading near 0.6844. The next key level to look out for on this move to the downside is the 0.6840 support level.
That level has held on 1 Dec and 4 Dec, limiting the downside to the pair. A break of which, will likely see the pair head lower towards the 0.6817 region.
The last few days show that there are plenty of pips to be made on both sides for the NZD/USD as long as you define and limit your risk well.
If the pair touches near 0.6840, we may see the buyers try to drive the pair back up higher. As long as the broad dollar strength is not raging strongly, that could be a level to eye for as sellers take off some of their profits as well from the move down in the last two days.
Almost forgot to add the ever old adage, never catch a falling knife though. If you are looking for a rebound, wait for the bounce. Don't be a hero.
