Quick Jumps and Fast Dives

Last Friday the NZD/USD was above 0.58900 a couple of times. The currency pair was within sight of the 0.61000 mark towards the end of January. On the 27th of February the NZD/USD was close to 0.60075. As of this morning the realm of 0.57860 is being seen with fast price action. A whirlwind has enveloped the New Zealand Dollar, but it is certainly not alone as volatility is demonstrated across the broad Forex board.

Day traders are now looking at lows in the NZD/USD which were last seen in the third week of January in a sustained manner. The optimistic bullish momentum that started around the 19th of January has suffered perhaps with thoughts of an overbought market being attained late in January, combined with the onslaught of nervous sentiment caused by the Iranian war since the end of February.

Technical Wagering in a Violent Forex Storm

Traders who are technically inclined may be tempted to jump into speculative wagers, but if they are paying attention know full well that value bursts have been quite regular and violent in the NZD/USD the past few weeks. Downwards momentum has also been rather strong. On Monday the currency pair did flirt with the 0.57650 ratio.

The NZD/USD has certainly been lower when a six month chart is looked upon. Financial institutions maybe tempted into thinking however that the New Zealand has currently been oversold, but also probably fear an additional backslide if global outlooks do not improve. The Iranian war shows no signs of ending near-term. Those who choose to bet on another optimistic climb upwards might be described as brave for the moment – but wrong. Yet, looking for continued lower trajectory from a wagering perspective remains difficult too.

Retail Trading in Markets Dominated by Large Players

The combination of poor sentiment globally and the approaching weekend in a day and a half may set the table for another dose of a confidence game for the NZD/USD via choppiness. Speculators need to understand their participation while perhaps opportunistic, is also very dangerous as swirling emotions continue to create havoc in the broad Forex market.

  • Day traders who want to wager need to use serious risk management and may also want to hope on sheer luck.

  • Quick fluctuations and too much leverage will make for many bad outcomes if the NZD/USD shifts into an unwanted direction.

  • The New Zealand Dollar looks oversold, but so do many other major currencies.

  • The problem is that short-term players often do not have the ability to hold onto positions for long durations of time in order to catch wanted reversals.

NZD/USD Short Term Outlook:

Current Resistance: 0.57895

Current Support: 0.57820

High Target: 0.58200

Low Target: 0.57690

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