NZD/USD – Retracing Towards the Trend Line

The NZD/USD Forex pair took a big hit in trading yesterday. The Kiwi Dollar lost around 115 to 116 pips and is now testing a key support level at a rising trend line. This is a long term trend line in play since the November 18 low at 0.6247. If you look at the trend line the NZD has been riding it lower as it challenged the support at 0.6570, December 9 low.

There is key near term support lining up at 0.6720. This is the trend line support for today. I am hoping to get a bounce at this point. Right now we are seeing some seller hesitation in the RSI as well. A bounce higher will be a good point to enter a desired short New Zealand Dollar (NZD) trade. We have the following resistance levels to watch. A pivot at 0.68/0.6801 is the first resistance barrier to watch. Above that is the December 2015 high lining up at technical resistance at 0.6883.

Should price action fall below the trend line that above scenario would go away. This means the NZD is getting ready to retrace even further sinking the NZD/USD into a new bearish trend. This means traders would have to be a bit more patient waiting on bounces higher towards former resistance levels to enter a short NZD trade as this Forex market would be back in bearish territory as sellers would be in control.

Right now, from a risk to reward prospective, the New Zealand Kiwi is trading to close to a technical support to justify a short NZD sale. Timing is a bit premature. There are also no bullish reversal signals to warrant a long NZD trade. I will opt to stand aside for a bit longer. Today I am flat in the NZD/USD Forex market.