NZD/USD Forex Signal: Potential Breakdown Ahead?

Potential Signal:

• I would sell the New Zealand dollar at 0.5850 with a stop loss at 0.5920, with a target of 0.57

The New Zealand dollar has been all over the place during the day on Friday, which is probably not a huge surprise, considering that we had the Non-Farm Payroll announcement coming out of the United States, which always tends to cause quite a bit of volatility. Furthermore, the New Zealand dollar was near a major area of importance, so the fact that we have seen a lot of buying and selling probably would have been expected regardless of the horrible job situation in America.

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Technical Analysis

It’s worth noting that the technical analysis does favor the idea of a big decision to be made soon. After all, we are sitting just below the 200 Day EMA and of course had formed an inverted hammer during the session on Thursday. In other words, there is a significant amount of resistance just above, and considering that the jobs number was so bad in the United States and the New Zealand dollar hasn’t really been able to keep the gains shows just how weak the Kiwi dollar is at the moment.

If we were to break down below the bottom of the candlestick for the trading session on Friday, then the bottom could fall out of this market, and we could really start to see a lot of selling at this point. In fact, this is exactly what I expect to see considering the performance of the New Zealand dollar over the last couple of days, and of course the fact that Asian currencies in general have been a bit of a disaster.

However, if we were to break above the top of the inverted hammer from the Thursday session, then I think the market grind it’s way back to the 50 Day EMA, and then the 0.60 level. Anything above there then opens up the possibility of 0.61 being targeted, which was the top of the previous consolidation area. I do not expect this to happen, but it is something to keep in the back of your mind.

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