Wednesday , 6 November 2024
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NZDUSD moved into a cluster of technical levels ahead of the RBNZ rate decision

The NZDUSD has been moving steadily to the downside after peaking at the start of last week near 0.63778. The low price today has reached 0.6116 so far – 262 pips in a relatively short period of time. In doing so the price has started to extend into a cluster of technical levels including the:

  • 100-day moving average of 0.6121
  • 50% retracement of the move up from the July lower to the end of September high at 0.6113
  • 200-day moving average at 0.60981
  • Swing area between 0.6098 and 0.61229

This area should give traders some cause for pause after the sharp move lower over the last week. However, the RBNZ rate decision on Wednesday in New Zealand is expected to yield a 50 basis point cut. With the Fed odds of a cut down to around 83% for a 25 basis point cut in November and the chance of NO cut from the Fed now up to around 17%, fundamentally that may continued pressure on the pair.

Nevertheless, the market knows this and as a result, the technicals have to prove the downside via a break below the key technical area.

What would disappoint the sellers?

On Friday, the price moved below a swing area between 0.6167 and 0.6179. Within that area is the 38.2% retracement of the move up from the August low at 0.61757. My feeling is that the price would need to get above that area to disappoint the sellers.

For dip buyer, leaning against this area would need to stall the fall to give the buyers the hope for a corrective move higher. The good news is for the buyers, risk can be defined and limited against the 200-day moving average at 0.60981.

This article was written by Greg Michalowski at www.forexlive.com.

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