NZD/USD tests 200DMA as RBNZ joins the jumbo rate cut club
NZD/USD is testing the 200-day moving average in the wake of the RBNZ rate decision, a level that one glance tells you is important from a directional risk perspective. Momentum indicators continue to generate bearish signals, but I'm letting the price action tell me what to do near-term.
If the 200-day moving average holds you could initiate longs with a stop beneath for protection against reversal. Above, .6110 previously acted as support, meaning the downside break may see it revert to resistance. .6160 may also see some selling, coinciding with the intersection of horizonal resistance at .6157 with the 50-day moving average.
If the price were to break above the downtrend running from the recent highs, it may open the door for a bullish reversal to .6210 or even .6254, the intersection of uptrend and horizontal resistance.
Alternatively, if the 200DMA gives way, you could sell the break with a tight stop above it or .6110 for protection. A close below the 200 would add to conviction of the trade .6084 is the first downside level of note, but to make the short stack up from a risk-reward perspective, it really requires a trade target of .6049 or .5985.
If the 200-day moving average holds you could initiate longs with a stop beneath for protection against reversal. Above, .6110 previously acted as support, meaning the downside break may see it revert to resistance. .6160 may also see some selling, coinciding with the intersection of horizonal resistance at .6157 with the 50-day moving average.
If the price were to break above the downtrend running from the recent highs, it may open the door for a bullish reversal to .6210 or even .6254, the intersection of uptrend and horizontal resistance.
Alternatively, if the 200DMA gives way, you could sell the break with a tight stop above it or .6110 for protection. A close below the 200 would add to conviction of the trade .6084 is the first downside level of note, but to make the short stack up from a risk-reward perspective, it really requires a trade target of .6049 or .5985.
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Forgot to add... good luck!
DS
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