Wagering on short term upwards momentum in the NZD/USD may prove worthwhile for speculators who practice solid risk taking tactics.
The upwards momentum in the NZD/USD currency pair has continued to ignite in early trading today. Certainly reversals lower remain part of the natural trading landscape and speculators should not wager on a strict one way avenue. However short term behavioral sentiment has displayed buying action for the past few trading sessions, this after the NZD/USD stumbled to a low of nearly 0.55890 on the 30th of September.
Long Term Bearish Trend may not be dead, but Short Term Reversal is inviting
The price action of the NZD/USD reflects a large part of Forex globally, which has seen the USD lose some strength the past couple of trading sessions. While it is true the lower depths technically for the NZD/USD were testing extreme lows, traders also need to consider that the bounce upwards is based on the suspicion the U.S central bank may begin to show signs of restraint regarding its hawkish interest rate policy.
However this interpretation of the U.S Federal Reserve’s next moves may be incorrect. Traders need to remain vigilant for changes in behavioral sentiment which are suddenly producing optimistic signals. Equity indices have done well the past couple of days, but the long term bearish trend in many global equities may not be over. It is entirely possible that the bounce higher displayed in equities and the sudden weakness of the USD could disappear.
The Buy Side is Attractive in the Short Term
Speculators should keep in mind jobless and earnings data will be published in the U.S on Friday. However if short term optimism continues to ring loudly in equity indices, there is a chance the NZD/USD will continue to challenge nearby resistance levels. Traders likely do not have to be reminded that on the 23rd of September the NZD/USD was trading above the 0.58000 level. And that on the 12th and 13th of September the NZD/USD was actually near the 0.61550 ratios.
- The strong bearish trend since the middle of September in the NZD/USD may have been overdone, short term speculators may want to wager on upside price action extending.
- Volatile conditions could be sparked in the NZD/USD if earnings data in the U.S comes in higher than expected on Friday; traders need to monitor the jobs data from the United States.
Wagering on short term upwards momentum in the NZD/USD may prove worthwhile for speculators who practice solid risk taking tactics. Traders should not be overly ambitious and be on the lookout for sudden reversals lower. While there appears plenty of room technically for the NZD/USD to recover additional ground that had been lost over the past couple of weeks trading, there are no guarantees. Behavioral sentiment remains fragile and traders need to remain cautious if they are pursuing upside price action that targets higher ground.
NZD/USD Short Term Outlook:
Current Resistance: 0.57750
Current Support: 0.57150
High Target: 0.58435
Low Target: 0.56990