NZD/USD Forecast May 18, 2017, Technical Analysis

The New Zealand dollar rallied during the session on Wednesday, breaking above the 0.69 level, and then turning around to test the breakout for support, which of course we got. We then shone towards the 0.6950 level and the bullish flag that I had drawn on the chart yesterday seems to have been validated. At this point though, it’s difficult to start buying unless we get some type of pullback to show signs of support below, which of course would be perfect if we can get it at the 0.69 handle. The other alternative way to go long of this market is to buy a break of the vinyl 0.6950 level above. Until then, you would be chasing the trade and that’s not what you need to be doing.

US dollar weakness

Pay attention to the US dollar in general, as it is showing signs of weakness due to political turmoil in the United States. However, these reactive moves sometimes won’t keep the momentum, so because of this I would need to see a supportive for our candle, or a breakout above the 0.6950 level for at least 4 hours. At that point in time, I would be much more comfortable buying. Until then, expect a lot of volatility as this is the least liquid of the Major pairs. Commodity pricing of course has an effect as well, and the overall attitude of those markets will influence where the kiwi dollar goes next. With all this noise, it’s very easy to get caught in the wrong side of the market, so caution will be needed over the next several sessions, least until we get some type of stability coming out of the political theater in Washington DC, which seems to have no end in sight.