The week on the New Zealand Dollar market begins with its clear strengthening as a reaction to the election of the new RBNZ chief – Adrian Orr, including in relation to the American currency.
Let’s start with a long-term view. In such a wide horizon we can see that the market has been defending itself in the area of horizontal support for several weeks, which has been slightly breached in the meantime (green arrow). As is known, such violations are often a good part of cleaning up the market from stop-loss orders set just under support.
If, in turn, we look at the current situation from a slightly closer perspective (H4 chart), then in the higher placed resistance (green zone from the weekly chart) a potential accumulation zone is emerging. It should be noted that until recently the supply could have been supported by the concept of a correction with geometry 1:1. An attempt to bring the price to new lows, however, was stopped twice on the local low from October (blue arrows). Such confirmation on the “right side” after the establishment of the low (violating the support) is often an element increasing the chances of bulls.
Currently, the market is clearly attacking the area of the nearest, horizontal resistance (red zone on the chart). Maintaining a break above this barrier may be a confirmation of demand taking over control on the market, and thus increase the probability that the consolidation from last weeks is the basis for expanding growth, not a stopover before further decline.
