Transcript of Video
Hello everyone, this is today’s video analysis for January 4, 2019. Today we’re looking at the New Zealand Dollar versus the US Dollar [NZDUSD] for today’s trade analysis.
Now, of course it’s important for me to mention the fact that in about 45 minutes from the recording of this video we’ll have US non-farm payrolls information. Jobs news. So, some of this analysis could change in the next hour or so depending on the sentiment after that news for the USD. So, keep that in mind as we go through this. There could be some changes in the next hour or so.
If we were to simply go on trend, the trend is and has been down for the NZDUSD for the past several weeks. We start all the way top of the black trend line. We’re looking all the way up into the 0.6970-level back into about a month ago. December 4, we started this downtrend. So, downtrend for an entire month. Of course we had the anomaly. The crash yesterday, where the market pressed all the way down here into the 0.6550s and then suddenly reversed and came back right higher again, leaving that long wick at the bottom.
So, the question is, is that anomaly. Will the market return to the downtrend? Will it start to give us signals of reversal to go back up? All of those are question I don’t think are answered quite yet, but we could see some of those answers come if we start to see breaks of new lows or breaks of new highs. What I mean by that is we see the resistance here at the pink-shaded area. We saw the market come underneath 0.6710, 0.6735, the pink zone, and fall off of that. That’ll be easier to see when I zoom in.
You could see historical resistance into that pink zone as well, and support by the way at that pink-shaded area historically. But that’s obviously our resistance along with the black trend line. So, a continuation of the trend means we’re looking for resistance there and then we also would look for the breakdown of the yellow zone, which has been challenged and tested for the past couple of days, but no break of that. I don’t consider this a break. I consider that challenge and test because we have not seen a full candle body underneath 0.6660, the bottom of the yellow-shaded area.
We also of course had that 100-period simple moving average in there. Floating around inside that yellow zone, showing that the market so far has been unable to break it. So, if we’re going to trade the trend, we’re looking for good news out of the US. Very positive news out of the US. Maybe a selloff of the NZD, the Kiwi. And we look for it to break the yellow zone and go lower and start to resume the downtrend.
On the other side of that, if we get poor news out of the US and we get the break of the black trend line and the break of the pink-shaded area above 0.6735, we could be looking for further reversal. And that could be signaled by this sudden pullback of this crash that we saw yesterday. So, we have to still watch for clues and evidence. So, if we’re a buyer, if we’re going to assume reversal to go back up for the NZDUSD, poor news for the US, good news for the New Zealand, a break of resistance. We’re going to look for it to break the pink-shaded area, the black trend line, and go back up. That becomes a buying opportunity above the pink zone.
Also, we could be looking at support at the yellow zone. So, those two zones are really going to be the tell of whether or not we’re reversing the trend to go back up above the pink zone or continuing the downtrend below the yellow zone, so we want to watch for that carefully in the next hour or so or even going into next week.
Let’s go and zoom it in a little bit here. And I mention the fact that we’d gotten under the pink zone. I just want to mention that again. We were under the pink zone. Found resistance, 0.6710, and then began that fall even prior to the long crash candle here. We had that fall from the pink to the yellow-shaded area. So, that confirms that pink zone as resistance. Of course as mentioned, the yellow zone as support.
So, we need to be watchful. Break of the pink zone resumes an uptrend. Break of the yellow zone resumes a downtrend. Part of that scenario will, again, potentially have to do with the USD. Just a quick peek at the USD index. It hasn’t been very friendly for us as far as trends go in the past 11 days. Just look at this black box. The market has been unfriendly for trend trading. Just zoom it in here. We saw every day basically we’re seeing a new trend.
If the market goes bullish again from the blue zone as it has for the past 10 days or so, we would look for it to go back up to the orange zone. We don’t know if that’s going to happen though. If the market goes bearish USD, breaks the blue zone, 0.9550, 0.9570 area, we would look for a bearish trend for the USD and of course the NZD, if this goes down, would go up. And of course if it continues what it has been doing and starts to go bullish again above the pink zone, back to the orange zone, we could look for the NZDUSD to go back down again.
So, we don’t really see a friendly trend for the USD index. We’ll keep an eye on that for the day today with news. And that will assist us in deciding which direction we can trade the NZDUSD today.
From Forex Traders Daily, this has been your daily analysis with Ross. If you would like to get Ross’ analysis on all the currency pairs he’s watching and all the trades he takes today, join him in his live Trade Room by clicking on the link below. Please leave any comments you have about today’s video in the comment section below.