NZD/USD Forecast October 25, 2017, Technical Analysis

The New Zealand dollar broke down significantly during the day, after initially trying to rally and break above the 0.70 level. Because of this, it’s likely that the market will continue to go to the next major support level, to be found near the 0.68 level underneath. I look at rallies as potential selling opportunities in a market that is ready to continue the bearish pressure from what I see, as the New Zealand dollar is facing a whirlwind of negativity after the election of the Labour Party to power. This course has the market worried about more spending, and that of course leads to quantitative easing. It’s hard to tell how this actually plays on, but right now it’s hard to deny the fact that there is a lot of negativity and that of course is something that should not be worked against.
I believe that the 0.68 level underneath should be supportive, and probably difficult to break down below. If we do, then that would be a very negative sign for the Kiwi dollar. However, I do think that we will be attracted to that level, and could offer an opportunity to take advantage of US dollar strength at the same time. I am a seller of exhaustive candles, and of course a breakdown significantly below the 0.69 handle. At this point, I don’t have a scenario in which a willing to buy, unless of course we form some type of supportive daily candle closer to the vital 0.68 level, or if we break above the 0.70 level above. The volatility continues to be extreme in this pair, so look at any dead cat bounce as an opportunity. Ultimately, I think we will turn around but it’s probably going to take several days to have that happen.