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NZD breaks key resistance point, back in downtrend

20 May 2010 09:25Peter Waring

NZD back inside its down trending channel

May 19th, 2010

After challenging the upper channel line of the downtrend the NZD/USD has been stuck in since last October, the NZD/USD has now broken down and crashed through a key resistance level at 6809 (68.09 cents to the US dollar). The NZD/USD is now firmly back inside its downwards trending channel and heading towards the lower channel line which currently stands at around 65c.

The Kiwi dollar is looking very oversold at present with the RSI below 30. The NZD hit a low of 66.59c yesterday in the currency markets, and is continuing to be hurt by the increased negative sentiment and high volatility surrounding the Greek bailout and the German ban on  naked short selling.

The NZ Dollar Back inside its downwards trending channel

In my last post on the NZDUSD I discussed the channel setup and some of the fundamentals surrounding the NZD. While the NZ economy seems to be recovering strongly the NZD has always been vunerable to quick sell-offs due to the tendency of investors and traders to rush to the perceived ’safety’ of the USD when there are signs of trouble or doubts about the strength of the global recovery .

In my opinion the long term picture for the NZD is still extremely bullish, provided the NZ economy can continue down the road to recovery as it has done over the past year.

Peter Waring

www.marketsunplugged.com

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