New Zealand Dollar Enters the Sell Zone

The New Zealand Dollar has pulled-back into an ideal sell-zone shows new analysis from Trade With Precision.

For those looking for the ideal time to exchange their Pounds or Dollars into New Zealand Dollars, it might be worth waiting for a better price because the Kiwi could go lower, according to the analysis of one prominent trading instructor.  

The current NZD/USD exchange rate is 0.6906 but Trade With Precision (TWP) trading coach Hao Sun says the pair is actually forming a set up on the four-hour price chart which strongly suggests more downside on the horizon.

The pair is in a firm downtrend on both the weekly and daily charts, says Sun, and it has now also rolled over and begun trending lower on the four hours, evidenced by its sequence of "lower highs and lower lows."

The pair has pulled back from a recent low on the four-hour chart into the ideal 'sell zone' between the 10 and 20 moving averages, and although it is still moving higher it will probably soon roll-over.

The 10, 20, 50 and 200 moving averages have all lined up, one above the other in an ascending order, which is a further bearish sign.

"Weekly and daily are in strong downtrends, the four hour is now also breaking down.." says Sun.

If the exchange rate forms a negative bar in sell zone and shows further confirmation by a break below that bar's lows, it will provide a signal the exchange rate is probably going lower down to a target at the 0.6845 lows, followed by the 0.6820 lows.

We also note using our own analysis that the pair is backing into further resistance form a trendline which is likely to pressure the add to the downward pressure as sellers will probably come in and try to sell into resistance. 

The pull-back has also completed an abc corrective pattern - further evidence it could be about to roll-over and resume its bear trend.

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What About the Pound-to-New Zealand Dollar Exchange Rate?

We can extrapolate the same analysis to other New Zealand Dollar pairs, such as NZD/JPY and NZD/GBP, which are showing similar set-ups.

On the four hour chart of NZD/GBP below, for example, we note how the exchange rate recently also backed into the sell-zone on the bar before last (circled) and formed what is known as a shooting star bearish candlestick pattern in the process.

The exchange rate fell after that sell signal confirming the resumption of the bearish trend, and although the current bar is green and positive, we are still bearishly inclined, and a rebreak below the current bars lows at 0.5212 would reaffirm the downtrend to the next target at the key 51.50 October lows.