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The New Zealand Dollar and US Dollar are both weak currently forming a ranging market.
However, will the range breakout and in which direction?
Watch the video to learn more…
https://youtu.be/IJdX5LD44TE
Today, we’re going to take a look at the NZ Dollar versus the US Dollar, the overall trend of the market, and what could happen next.
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Retail Sentiment
In previous videos, we mentioned that NZD and USD were both weak and against each other. We also saw the market go into range. However, there is still a downtrend in play, and we could possibly see more from this market.
What drew to this market is the retail traders information. It is showing us how retail is positioned on the week. There are a lot of short positions coming in, with 57% of retail traders short while the price is consolidating.
I want to be a short seller but this is telling me that it probably won’t happen right now. I think we’re going to see a breakout higher of this range into a key high volume level.
The NZ Dollar and US Dollar are both weak currencies which is why the market is currently in short-term range. However, the retail sentiment data could tell us where the price could breakout.
The change this week shows us that retail traders increased their short positions by 28% and decreased their long positions by -7%. This shows us that they expect the price to fall. Retail traders are typically wrong which could mean a breakout higher is more likely to happen.
Daily timeframe
If we look at the overall trend of the market in the daily timeframe, we can see that the price is making lower lows and lower highs.
What’s interesting about the high volume sitting at 0.7168 is that there is a lot of supply there. We know that because after the consolidation, there was a large breakout candle and a large move down. That means that there are unsettled trades to be filled for it to continue down.
There is a major supply zone resting at 0.7168. We know this is a supply zone because of the aggressive breakout of sellers after the consolidation. This will make a great target zone for long opportunities.
Retail sentiment might look at this and expect a breakout and a move up to the 7168 level. So, I actually think we’ll be breaking out to the upside.
Four-hour timeframe
If I go down into that four-hour timeframe, we can see a breakout making a higher high.
We can see the range in more detail in the four-hour timeframe. If the price closes above the current range highs, look for a short-term long entry back up to the high volume level and supply zone.
If the price comes and retests the structure, we may get a long position up to 7168. Then, we could look for a short opportunity from the supply zone.
So, keep those points in mind when trading NZD/USD this week. But, don’t forget that the price could still break and ignore our bias.
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