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Is NZD/USD in the horizontal channel?
NAFTA, Brexit, worries around Italy got all the attention of traders. However, it’s always worth to take into consideration other currencies that can offer good opportunities to make a profit.
Let’s dive into NZD trading.
The downtrend of the NZD/USD started in the middle of April and had been continuing until the middle of August. However, moves of the past recent weeks signal the forming of the horizontal channel. Does it mean that the NZD got chances to recover or it’s fake signs?
A relief for the NZD?
Last week differed with the big amount of economic news that didn’t let traders invest in the risky assets. NAFTA negotiations, Italian budget, Brexit deal had been putting pressure on markets. As a result, the NZD couldn’t stick at good highs. Moreover, the USD was supported by the rate hike. Although the market anticipated an increase in the rate that didn’t push the USD to significant highs, at least, this decision helped the US dollar to become stable.
Up to date, the NAFTA deal that had been threatening traders in past weeks ended successfully. The US, Mexico, and Canada came to an agreement and formed United States-Mexico-Canada agreement (USMCA). It seems that the Brexit deal is closer and closer to the end. The fewer worries, the more chances for the risky assets. However, the NZD/USD pair doesn’t look strong.
Firstly, the market is still under pressure because of the Italian budget issue. Risk won’t let traders invest in the NZD. Secondly, the lack of the New Zealand economic data and the big amount of the US data gives positive signals for the USD and negative for the NZD.
Does it mean that the trading in channel is fake and the downtrend will be resumed?
What about the technical side?
On the weekly chart, the Relative Strength Index has been moving within 30-70 levels. If only the pair is able to break one of these levels, the pair will show significant moves. Otherwise, the consolidation is anticipated. The MACD indicator doesn’t give signs of the strong moves as well. Moving Averages are going in the horizontal direction that is an additional sign of the pair’s consolidation. As a result, in the middle term, the pair is anticipated to trade within 0.65-0.6720 channel. If only the USD is able to surge to previous highs (breaking news), the pair will fall below 0.65. The break below the support at 0.65 will be a crucial moment for the pair. The further fall to 0.6265 will be likely.
Making a conclusion, we can say that there are no significant drivers for the NZD. However, according to the technical side, there are chances that the currency will be able to stick within the horizontal channel. If only the USD surges crucially, the NZD/USD pair will plunge. Otherwise, we still anticipate the trading in the channel.
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