Failed after making new year highs on Friday

The NZDUSD moved to new year highs on Friday - taking out the recent high from June at 0.7296. The high on Friday extended to 0.7306.

The high today could only get to 0.7304. The price fell below the 0.7296 level and has seen a steady deterioration lower.

We are currently testing the low for the day and the 38.2% retracement of the move higher from last Wednesday's low. That level comes in at 0.7219. A move below will look toward the 0.7200 level where the 100 hour MA (blue line is found. The Friday low at 0.7210 will also be eyed.

The thing about the move lower is the usual pushes from stocks falling or commodities falling is not really in play. . The S&P is up 0.50% on the day and trades near the highs. The CRB index is higher by 0.26%. Gold is down. Silver is up. So it is a technical thing. Which is ok. Markets get overextended.

Technically, the price did"

  1. Fail at the highs (chart above)
  2. Fell below trend line support (chart above).
  3. The correction held the underside of the that trend line (chart above).

Looking at the 5- minute chart, the correction off the first trend leg lower:

  1. Held within the correction zone defined by the 38.2-50%
  2. Held below the 100 bar MA (bearish).

The next leg lower has also seen the price hold the 38.2-50%. The 100 bar MA (blue line in the chart below is tracking lower and is now risk for traders looking for a bigger move lower.

There is good support not too far away at 0.7200-10 (so we are seeing some support buying and that makes sense - profit takers will be happy with the trade), but if the technical picture can remain more bearish (stay below the 100 bar MA at 0.7238 area), indications are that the pair can go further. It does need that push through support though and that can be tough in an NY afternoon session.