NZD/USD Forecast May 2, 2017, Technical Analysis

The New Zealand dollar has skyrocketed against the United States during the day on Monday, but has also ran into a bit of trouble just above the 0.69 handle. The market turning around is a very real possibility in this area, and if we drop down below the 0.69 level, I feel that the longer-term downtrend should continue. Alternately, if we can break above the 0.6933 level, the market could then go to the 0.6950 level next. I am a bit hesitant to buy though, because we are so overextended in the short term. The markets have been sold off rather significantly, so this selloff isn’t sustainable and therefore it makes quite a bit of sense that we could get a strong bounce. Pay attention to the futures markets, the New Zealand dollar tends to be very sensitive to the overall “attitude” of the commodities markets.
If we did break above the 0.6950 level, the market could then go to the 0.70 level, but I suggest that’s probably not going to be very likely. I believe in selling this rally, but do not have the signs to do so quite yet. Again though, I think a breakdown below the 0.69 level probably has this market looking for the 0.6850 level underneath there. This move certainly has been sharp, and therefore unsustainable, at least at this pace. Part of the velocity probably is due to the May Day celebrations, as of course volumes would’ve been a bit thin. So, having said that, I believe that this will end up being a nice selling opportunity before it’s all said and done as the New Zealand dollar has been so beaten up. We would need to see a massive “risk on” rally around the world for me to be convinced to buying this pair for any real length of time.