Transcript of Video
Hello everyone, this is today’s video analysis for December 7, 2018. Today we’re looking at the New Zealand Dollar versus the US Dollar [NZDUSD] for today’s trade analysis.
Before I get into the chart analysis, it’s important to recognize of course at 8:30AM Eastern US time, about 40 minutes from the recording of this video, significant news out of the US. Non-farm payrolls could have an impact on all US currency pairs, so you definitely need to pay attention to that. Of course at the same time, there’s some Canadian employment data popping up as well. So, USDCAD could be highly volatile. Any US pair could be highly volatile. You just need to pay attention to that.
It’s probably a good idea if you’re in any live trades as I am in on the USDJPY, as you could see at the bottom, that you protect profit. Either close some profit. Move your stop losses into profit. That’s an important thing to do prior to significantly volatile news that we could have.
So, let’s go ahead and pay attention to those things. Let’s start here on the NZDUSD daily chart. Of course we’ve been studying a couple of different things. First off, previous downtrend. Black trend line on the left. We broke through that several weeks ago and have been moving higher along the rising black trend line on the right-hand side. So, two different trends. Downtrend: left. Uptrend on the right. Shorter uptrend, but definitely an uptrend on the right-hand side.
Now that we see that, let’s zoom back in. Look at the pattern within the rising trend. I’ve kind of delineated four different areas with the red lines. Somewhat falling channels. Retracements. Pullbacks. Whatever you want to call them. These four periods. Down here at the bottom, when it was breaking through the longer-term down trend line, went down for a period. Broke through it. Went higher. Got through the 100-period moving average. Went higher. Fell back down again. Went up. Made a new high. Fell back down again. Went up. Made a new high. And now we’re falling back down again.
So, the real question is will the pattern of the trend continue. Will it find support and will it turn back higher again as it has for the previous three times that the market has pulled back here on the NZDUSD? What’s it going to take for this to go up? Well, let’s go over here. Real quick take a look at the USD index chart.
USD index. We’ve been in an uptrend. You could see that with the red trend line. You zoom it in. Take a look. The past – we’ll just count today too – seven days we’ve been bouncing around inside, between the green and the yellow-shaded area. So, if the USD, this, again, the USD strength on the index. If the USD rises, let’s see. We get good news for non-farm payrolls. USD rises. Breaks through 97 and continues to go up, challenging the highest highs into the 97.30, 97.40-level. Breaks that and goes up in the direction of the long-term trend. The USD goes up. That’s going to cause NZDUSD to go down and break this pattern. Maybe break the green zone, 0.6830, 0.6850. Go lower towards the black trend line again or even further.
But definitely would expect if the USD significantly rises, this pair would go down. The other side of that is if the USD breaks the yellow zone 96.60 or so and goes down. We get poor news and the USD starts to tank and go down, breaking the red trend line and going lower. If that happens, then of course we go back to the NZDUSD, and then we’d look for a bounce off the support and maybe a new high here made for the NZDUSD.
Poor news out of the US, this goes up. Good news out of the US, this would go down on the NZDUSD. Just something to think about as you go into the next hour or so. Zoom it in a couple of times here, so we could see this a little bit better. Green zone obviously your next support. 0.6850, 0.6830. Again, following the pattern of the trend, what we would expect regardless of news is that we’d look for support, a new rally. Breaking the yellow zone would see a new high likely made, especially above the orange-shaded area.
And of course all that would be an implication of poor sentiment for the USD. This would tend to go back up for the NZDUSD. Good sentiment for the USD, I suppose we would look for the breakdown of the green zone and challenges of the next several supports, the blue and the pink-shaded area. So, definitely something to watch there. Let’s follow the pattern of the trend. Let’s watch the news. Definitely you want to pay attention to that, but follow the pattern of the trend. I would be more likely at this point looking for support at 0.6850, 0.6830. Look for the continuation of the trend pattern. Doesn’t guarantee it, but definitely something I would focus in on for the NZDUSD today.
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