NZD/USD current 0.6545 is the result of last year’s drop from 0.8823. March 1985 NZD/USD free floated at 0.4444. The 30 year halfway point is found at 0.6633. Previously I mentioned how humps existed in the intermediate terms in our currency pair prices such as EUR/USD, USD/CAD, AUD/USD. Intermediate terms is where we see most oversold / Overbought. Its not just oversold or overbought, its scary oversold and overbought. NZD/USD earns the distinction to be most oversold of all the pairs and its typical for NZD because NZD is so perfectly locked into the exact same 253 trading day count as USD. And its why NZD always outperforms all other pairs in percentage changes. Oversold means once 0.6692 broke below, price now trades in deeply oversold. Previously mentioned as well is our markets are not correct in its prices, they are actually ailing. But what’s happening is markets are in a complete re structural and normalization mode that will take time to fully adjust to find prices normal again. Those adjustments could last 1 year but its the result of the 2008 crisis. Despite 7 years, markets never normalized instead they remained sick and ailing. To see prices so stretched in overbought / Oversold is a rare day.
NZD/USD Again a downsloping curve. Points highest to lowest 0.6588, 0.6571, 0.6561, 0.6548. Never trade between levels. Range breaks above 0.6611 and 0.6595. An important line exists at 0.6608. A break above would see higher prices but this is the point that will take NZD/USD lower as its a trend just beginning. Range breaks below 0.6501, 0.6486. Despite severely oversold, we must continue to hit the short side. Consider a Fed rate hike and NZD traveling far lower due from the hike. That’s exactly what will occurr. So strategy is sell and sell rallies.
Brian Twomey Inside the Currency Market, btwomey.com