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This setup is designed to work with the range that’s shown in NZD/USD since the summer of 2016. We’ve been following this setup for some time now, and the door may be opening for short-side exposure as prices are starting to move back-down after spending much of the past two months in this resistance area on the chart. The price of .7335 is especially interesting, as this is the 38.2% Fibonacci retracement of the 2009-2011 major move, and this price has helped to demarcate the resistance zone that’s been at work for more than a year.

NZD/USD Weekly Chart: Range-Bound Since 2016

nzdusd weekly chart

Chart prepared by James Stanley

On a shorter-term basis, price action has started to test this longer-term area of resistance as shorter-term support, and given that we had a fresh weekly low print earlier this morning, the prospect of bearish continuation opens the door for the range to fill-in on a longer-term basis.

NZD/USD Hourly Chart: Lower-Lows, Highs as Bears Test Through Key Level

nzdusd hourly chart

Chart prepared by James Stanley

Stops on the position can be investigated at three possible areas based on how aggressively one wants to trade the move. The more nearby point of reference is this week’s swing high at .7373, and last week’s swing-high can also be used at .7395. On a longer-term basis, the 2018 high at .7437 can be used; and each of these can be justified with an initial target to .7200, at which point stops can be adjusted to break-even. Secondary targets could be sought out above the .7000 psychological level.

NZD/USD Daily Chart: Proximity to Resistance Opens Attractive Risk-Reward

nzdusd daily chart

Chart prepared by James Stanley

To read more:

Are you looking for longer-term analysis on the U.S. Dollar? Our DailyFX Forecasts for Q1 have a section for each major currency, and we also offer a plethora of resources on USD-pairs such as EUR/USD, GBP/USD, USD/JPY, AUD/USD. Traders can also stay up with near-term positioning via our IG Client Sentiment Indicator.

Forex Trading Resources

DailyFX offers a plethora of tools, indicators and resources to help traders. For those looking for trading ideas, our IG Client Sentiment shows the positioning of retail traders with actual live trades and positions. Our trading guides bring our DailyFX Quarterly Forecasts and our Top Trading Opportunities; and our real-time news feed has intra-day interactions from the DailyFX team. And if you’re looking for real-time analysis, our DailyFX Webinars offer numerous sessions each week in which you can see how and why we’re looking at what we’re looking at.

If you’re looking for educational information, our New to FX guide is there to help new(er) traders while our Traits of Successful Traders research is built to help sharpen the skill set by focusing on risk and trade management.

--- Written by James Stanley, Strategist for DailyFX.com

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