New Zealand dollar approaching support against CAD again
The New Zealand dollar fell again during the trading session on Thursday as we head into the Easter weekend. The New Zealand dollar of course is a significant venue to express what risk appetite, but then again so is the Canadian dollar. Overall, this is a market that has been consolidating for some time, so it’s likely that we will continue to be paying attention to the level just below.
Will the range hold?
The question is whether or not the range will hold? The 0.89 level has been supportive, and it does extend down to the 0.8850 level, so at this point it’s likely that we could see some type of bounce. In if we were to break down below there obviously would change the complete analysis but at this point it does look like we are at least trying to find some type of footing.
With Friday being Good Friday, most banks will be gone so it’s likely that we will do very little. Quite frankly, Friday is going to be a difficult trading session for anything more than a longer-term position, so you would be forgiven for stepping to the side in simply waiting until Monday.
That being said, the 0.89 level has been very important, just as the 0.9250 level has been very resistive. Ultimately, we have seen this rectangle hold since November of last year, so obviously this is a place that value hunters should come back into the market. If they don’t, then obviously something has changed and we could drop much further.
The potential targets that show up on the chart depend on the direction broken. If we break down below the 0.8850 level, then it’s very likely we will go looking for support at the 0.8750 level. However, if the range does continue to hold then a bounce will probably go looking towards the 0.9050 level, where we had seen the most recent selling. If we can break above there, then we could go to the 0.9150 level followed by the 0.9250 level.
It is no mistake that the targets are separated by even numbers, because quite frankly the markets have simply been going back and forth for some time, not just this pair by itself. Beyond that, we are starting to get relatively close to the summer time and volume will start to dry up.
A big problem with the currency markets as of late is that the global economy is a big mess, and some people see bullishness while other people see a lot of bearishness. Ultimately, this leads to a lot of confused and choppy trading but that’s okay, that’s exactly the way to play these ranges, assume that the choppiness continues. If it doesn’t, then you have a trade that is just as easy. Think of any long position in this area as simply paying a little bit to the market for information. If it doesn’t pay off right away, then it pays off in the other direction. It is that these inflection points that the real money is made.