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Home ANALYSIS

NZDUSD corrects 38.2% of the move higher. Finds buyers on the first test.

A.R Chowdhury by A.R Chowdhury
March 28, 2022
Reading Time: 5 mins read
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NZDUSD corrects 38.2% of the move higher. Finds buyers on the first test.

NZDUSD

NZDUSD on the hourly chart

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The NZDUSD has slumped to the downside helped by a general weakness in commodities that are pushing NZD, AUD, and CAD to the downside.

Also helping the decline is the move below some key technical levels.

Looking at the  NZDUSD 
NZD/USD

The NZD/USD is a commonly offered currency pair representing the New Zealand dollar or Kiwi and US dollar.  The pair is popular for exposure into a commodity currency, i.e. the NZD, which helps capture risk appetite for forex traders. Like its Antipodean counterpart, the Australian Dollar, the NZD/USD is seen as a carry trade, due in part to interest rate differentials which favor the NZD. The NZD is the world’s seventh most liquid pair at the time of writing with the USD being the world’s most traded currency and the NZD being the tenth. What Affects the NZD/USD? The NZD/USD is offered at virtually every retail forex brokerage and is a common pair for traders to have experience with.  The pair moves on investor sentiment and can be much more volatile than other pairs such as the EUR/USD, GBP/USD and others. Given New Zealand is the world’s largest exporter of milk powder, this metric is a key factor when driving the pair. Any sensitivity to milk powder exports is captured via the NZD/USD. Additionally, tourism is a key contributor to the New Zealand economy and as such help move the currency pair.  Other factors of note for the NZD/USD include export volumes to China as well as other important economic data releases from China.  Central banks also play a primary role in the direction of the currency pair with both the US Federal Reserve and the Reserve Bank of New Zealand being closely monitored by investors.  Monetary policy is more than capable of abruptly moving the NZD/USD, which can oscillate much more than other normal pairs.

The NZD/USD is a commonly offered currency pair representing the New Zealand dollar or Kiwi and US dollar.  The pair is popular for exposure into a commodity currency, i.e. the NZD, which helps capture risk appetite for forex traders. Like its Antipodean counterpart, the Australian Dollar, the NZD/USD is seen as a carry trade, due in part to interest rate differentials which favor the NZD. The NZD is the world’s seventh most liquid pair at the time of writing with the USD being the world’s most traded currency and the NZD being the tenth. What Affects the NZD/USD? The NZD/USD is offered at virtually every retail forex brokerage and is a common pair for traders to have experience with.  The pair moves on investor sentiment and can be much more volatile than other pairs such as the EUR/USD, GBP/USD and others. Given New Zealand is the world’s largest exporter of milk powder, this metric is a key factor when driving the pair. Any sensitivity to milk powder exports is captured via the NZD/USD. Additionally, tourism is a key contributor to the New Zealand economy and as such help move the currency pair.  Other factors of note for the NZD/USD include export volumes to China as well as other important economic data releases from China.  Central banks also play a primary role in the direction of the currency pair with both the US Federal Reserve and the Reserve Bank of New Zealand being closely monitored by investors.  Monetary policy is more than capable of abruptly moving the NZD/USD, which can oscillate much more than other normal pairs.
Read this Term
hourly chart above, earlier in the day, the price was able to break back below its 100 hour moving average (blue line in the chart above).

The last time the NZDUSD had a closing hourly bar below its 100 hour moving average was back on March 16. On Friday near the end of day, the price did briefly move below that level but closed above the moving average line (blue line in the chart above).

In the Asian session today, the price waffled above and below the 100 hour moving average line but gave way in the early European session. One last test of the moving average found sellers against the level. That was the clue for buyers to turn to sellers. As a result the NZDUSD price pushed lower over the last seven trading hours.

In addition to the break of the 100 hour moving average, the move to the downside has also now seen the price break below its 200 hour moving average at 0.69129 (higher green line in the chart above). The last time the price traded below its 200 hour moving averages back on March 16. Bearish.

Finally, the price also fell back below its 200 day moving average (overlaid thinner green line) currently at 0.69076.Bearish.

The low price just reached 0.68872. That took the price briefly through the 38.2% retracement of the move to the upside from the March 15 low at 0.6888, but the price has rotated back to the upside and currently trades at 0.6895.

What next?

The range today is 76 pips. The average over the last 22 trading days has been 69 pips. So the average trading range has been reached and surpassed. With the 38.2% retracement holding support, there could be dip buyers against that level on the first test. However, a break below would have a traders would likely lead to more selling momentum with the traders next targeting the swing low from last week, and swing low from Friday, March 18 between 0.6862 and 0.68659. The 50% retracement of the move up from the March 15 low comes in at 0.68576 and is also near the swing low area

Risk now, will the be the 200 day moving average and 200 hour moving average between 0.69076 and 0.69134. Stay below, and the sellers can feel like they’ve tilted the bias more to the downside. Move above and sellers would be disappointed of the failed break.

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A.R Chowdhury

A.R Chowdhury

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