NZD/USD Forecast June 20, 2017, Technical Analysis

The New Zealand dollar initially tried to rally on Monday, but found enough resistance at the 0.73 level to turn things around rather rapidly. Because we breakdown below the 0.7250 level, I think that we will probably reach towards the 0.72 handle after that. I don’t necessarily believe that it is some type of meltdown waiting to happen, and I believe that it is more to do with the US dollar strengthening in general and of course the interest rate outlook for the Federal Reserve doesn’t hurt the situation either. I believe that this is essentially a technical move, therefore I am not willing to put too much into the trade, but I do recognize that a pullback is probably likely. However, I think the longer term we have another situation brewing.
I believe that the 0.72 level underneath is supportive, while the 0.73 level above is resistive. It is consolidation as far as I can see, and I think we are bound to test the bottom of the range and again. I think that the New Zealand dollar does have more of an upward bias if commodities can rally, but in the meantime, I think it’s easier just to trade this market back and forth and take advantage of the volatility with smaller trades. The market pays off quite quickly, as even in a consolidated area, the New Zealand dollar typically moves rather rapidly.
If we do break above the 0.73 level, and I think we will sometime in the relative near future, the market should continue to go much higher, perhaps reaching towards the 0.75 level as it is the next psychologically significant level. Ultimately, I would be willing to add to a long position above the 0.73 handle.