NZDUSD:- Price Plummets After RBNZ
Snap! After a few dry days of consolidation comes the storm....
"What we need to do is stand aside until we see a break out of this consolidation before taking a trade so we can be sure of the next direction. Should we break out to the upside , see a retest of the zone and continuation, we should see this pair move back towards 0.6850 . If we break lower, retest the zone as resistance and continue, we may now see price retest 0.6700 and break lower to make new daily, weekly and monthly lows"
The above is my advise on this pair written yesterday, today's price action is why we stand aside until we see the conformation we need.
Like me, many of you will be waking up today to see the massive decline on this pair which occurred overnight. Though I was actually watching this move happen in the early hours of the Asian session, many would have been asleep and if one had not waited for the break out of the consolidation zone like I said and took a long trade, you will be waking up to your trade hitting stop loss.
After another failed attempt to break out of the consolidation zone to the upside yesterday, price pushed back down to the bottom of the zone, then recovered a little before the floor fell from underneath this pair and we saw a 100 pip drop. We have now broken the major key level of support at 0.6700 and currently trade at levels not seen since May 2016. This is mainly due to the New Zealand dollar weakness and comments made from the RBNZ yesterday about the currency and the economy.
Currently, this pair looks like a blood bath on the charts as we have seen continuous falling over the past 11 hours. Many will see what has happened this morning and we could produce a new wave of short sellers taking this pair lower. We will also see a wave of profit taking which is one reason we may see a pullback at least, first, back to 0.6700. This level is my key monthly support level and I would expect this level to be respected and for the price to retest this after breaking through, if it is not straight away, this will come over the coming days. From this level, we can then evaluate the current set up and either take a short trade once we retest and reject this level or, if we close above 0-.6700 on the daily chart today, this will be a sign of rejection from these lows once again and the price could push higher.