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Is the NZDUSD trend about to end?
In this video, we take a look at the #NZDUSD in-depth and why the trend could be about to end.
https://youtu.be/9kVVXeYFXzw
Hi guys, welcome to today’s Blueberry Markets video update with me, John Kibbler, Head Currency Analyst.
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In this video, I want to go over the NZD/USD a little bit more in-depth. I talked about it in the Forex Market Outlook. Still, I’m going to focus on NZ Dollar versus the US Dollar specifically, and the reason is that this is the perfect reversal pair in terms of what I look for when looking for a trend to may be about to change.
The trend is very much up right now. We’re making a higher high, higher lows, that is likely to continue until we see that weakness start to creep in whether we start seeing lower lows or lower highs.
The last time we had a strength and weakness signal was to buy NZD/USD, which was around the first of April. So, around here, we had different extremes. The extreme is plus seven to the NZ Dollar because it is strong, and minus seven to the US Dollar. The last time it was inversed, Kiwi was minus seven, and the US Dollar was plus seven, and it was around the first of April 2020, and we can see what happened after that, it had a nice move to the upside formed after that point.
We’ve got that extreme signal coming into play once again. I want to be looking for potential reversal opportunities. Not only did we do a little bit of research on the Commitment Of Traders and the commercials contract, but short contracts also increased by 23%.
Now, the commercials area people are not looking to profit from the markets; they’re buying or selling on value. When the market is falling, they will buy more of a currency. When the market is rallying to the upside, they will sell more of the currency and the short contracts are now at all-time highs for the last six and 18 months, this is looking quite good for a potential shorting opportunity, right here.
We spoke in-depth about the seasonality and that the US Dollar could be about to turn as well. We’ve got all these factors in place, which is great. We need to see the technicals come into it and we’ve already discussed a few technicals, but I’ll go through them again if anyone hasn’t watched that Forex Market Outlook. We have this uptrend now in a changing cycle. We want to see lower lows, and lower highs start to form, and the current low that we have in place is this one, through here.
I want to see the market too — we have a resistance rallying and reject this zone up here. We may even see the market rally a little bit further and break out this high, in here. We’re either going to see a continued rally for this week or maybe a reversal this week or next week.
I don’t want to be buying this currency pair anymore. I want to be sitting and waiting for the potential reversal setup because the reversal of these got to a point now where it might highly likely occur.
One of the things that we want to look for is those change cycles or off resistance. If it rallies again, I will be looking for a double-top pattern or anything like that, suggesting we will see a rejection. But all in all, what we need to see is that change in cycle. That will confirm that the market is going to move in our favour. The last time we had that signal was down here, around the first of April. At that point, the market is very much in a downtrend, and you need to wait for that higher high to form to confirm our buyers.
So that’s what got, the market then formed a higher high, which is great. That gives you the confidence to start buying the market on these dips, and then we had that nice rally to the upside forming. Now that we’ve got a similar situation, I want to wait for those lower lows, lower highs to come into play before taking action on this market. Don’t get too involved short in this market just yet. Wait for the price action, wait for the change in trend, and wait for those technicals to line up with your bias.
Thanks for watching this video update, and I’ll catch you on the next one. Cheers!
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