"Set piece" area has traders leaning on test
The NZDUSD has been pushed lower on the back of "risk off" flows due to trade war concerns and anxiety about global fragmentation in general (re: NATO).
However, the fall has run into a key support level for pair on the daily and hourly chart. That has led to a potential "set piece" trade, for those looking for a bounce with little risk (for my latest video where I take a World Cup view of trading, see "What does England soccer, NBA basketball and Forex trading have in common?")
Looking at the daily chart above, the 2017 low for the pair comes in at 0.67795. That low was taken out in June and into July but moved back above on Friday. Today we moved back down to test that old low level. The low reached 0.6782 and has bounced on the first test. Traders leaned against the level, looking for a bounce.
They were helped by support on the hourly chart as well. Drilling to the hourly chart below, the price decline was also bumping up against the 200 hour MA (green line in the chart below). That MA comes in now at 0.67852.
If the pair is to go lower, those levels need to be busted. If so, the 50% on the hourly at 0.67725 is the next closest targert. A move below that level opens the door for more downside potential.
For the time being though, traders looking for a dip to buy, are leaning against the level and looking for a rebound. The low from yesterday and swing lows from earlier today at 0.6805 followed by the 100 hour MA at 0.68204 are upside targets on a correction now.
