Forex: NZD/USD: Resistance at 200-day SMA

on Sep 13, 2013
Listen September Friday 13th_: The NZD/USD price action yesterday formed a hammer pattern, with the daily candle opening at 0.8145 and subsequently reaching a low at 0.8104 and high at 0.8156 (the highest point since 29 May) before finally closing at 0.8130. The hammer is a bullish sign, indicating that the price is finding strong support to the downside. Its emergence in the pair’s rise since Wednesday is pretty clearly attributable to the decision of the Reserve Bank of New Zealand to keep the official cash rate at the current level of 2.50 percent.

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So far today though, the market has been ignoring the hammer pattern and has the pair currently positioned at 0.8139, with the intraday low so far at 0.8094 and the intraday high at 0.8145. A breakthrough of yesterday’s high would send the price higher.

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Since Wednesday the pair has been experiencing difficulty in getting above the slightly descending 200-day simple moving average, at the moment resident at 0.8148.
The daily stochastic oscillator has been moving above the 80-line since 5 September, indicating that the pair is overbought and raising the prospect of a fall in the near term.

Heading further north, the NZD/USD would find its way to the 0.8200 psychological and strong resistance level, which hasn’t been visited since 22 May. Southbound, the price would be looking to test the 0.8000 psychological support.
The US reports (Retail Sales, PPI and Consumer Sentiment) due out later today may give a degree of forward guidance for the pair’s direction.


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