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NZD/USD Price Forecast January 22, 2018, Technical Analysis

By:
Christopher Lewis
Updated: Jan 20, 2018, 07:08 UTC

The New Zealand dollar initially rally during the Friday session, but then pulled back a bit to test the 0.7275 level. I think there is plenty of support underneath, and therefore we will continue to see a lot of consolidation. However, longer-term charts look as if they are a bit overbought, so pullbacks could be a concern.

NZD/USD daily chart, January 22, 2018

Looking at the short-term charts, I believe that the New Zealand dollar is going to continue to consolidate, giving us an opportunity to trade in both directions if we are nimble enough. I am using the one-hour chart and stochastic oscillator to trade this market right now, but I do recognize that the longer-term charts look a bit overextended. Because of that, we may need to pull back to build up the necessary pressure to go to the upside. If we break down below the 0.72 handle, I think at that point it’s likely that we are going to continue to go lower, to at least the 0.71 handle. I recognize that there is a significant amount of resistance just above, so I do not think that a breakout to the upside is likely. We may have to grind a bit to finally break out, so I think that it makes sense that you be very quick with your trade, and don’t hang onto anything for too long.

Longer-term, the US dollar has been very soft, and I think it will continue to be. However, it’s gotten a bit ahead of itself so that’s why a look at the chart with a little bit of caution. Short-term back and forth trading probably makes the most sense, but I use the stochastic oscillator as a signal, looking for overbought or oversold crossovers, which is one of the most basic ways to trade.

NZD/USD Video 22.01.18

About the Author

Being FXEmpire’s analyst since the early days of the website, Chris has over 20 years of experience across various markets and assets – currencies, indices, and commodities. He is a proprietary trader as well trading institutional accounts.

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