With the Aussie dollar affected by relations between China and the US, a strong risk off move has happened with weaker third quarter GDP figures only compounding the pairing AUD/USD.
This is causing a knock on affect to the other commodity reliant currencies. The NZD/USD has seen a selloff in recent days, albeit not to the same extent as the AUD/USD.
The NZD/USD has shown strength in recent weeks with a strong 400+ rally and bullish weekly candles to match. The daily chart confirms the uptrend by forming higher highs and higher lows.
Support & Resistance Levels
Support levels: 0.6854 & 0.6703
Resistance level: 0.7000 & 0.7046
The market has recently broken through the resistance level at 0.6854, with this now acting as support. The recent sell-off has seen the market retrace back to this level. Support levels are areas buyers will look to enter the market, therefore whilst we are above that level, expectations are for a continuation of the move higher.
Should we break back below 0.6854, the next major support level is 0.6703 however prior to that is the last low of 0.6753. Should that be taken out then the market is no longer trending higher but sideways at it will have created a higher high and a lower low. Not giving clear signals of a direction.
To trade AUD/USD, as already highlighted, price is close to and above of the support level, then it offers a good area to buy. A stop loss should be placed below 0.6854, if it breaks below that level then the market is beginning to show you that a move lower is likely. Targets should be the round number of 0.7000 and then 0.7046. The risk to reward ratio will work in your favour.
Until you actually get the cross on the MACD, the sell signal is not confirmed. Today will be a key day in the upcoming trend, especially with US data coming out in the form of non-farm payrolls. A strong number could see this break below the support and start to see the NZD/USD range.
Disclaimer: This should not be used as investment advice and is only an opinion. Do your own research before looking to risk your own capital in the financial markets.