Yesterday, the RBNZ hiked rates by a greater than expected 50 basis points (est 25 bps) and the price for the NZDUSD initially spiked higher.
However, after the NZDUSD price reached the 200 hour MA and the 200 day MA (green lines in the chart above), sellers leaned against the dual moving averages, and the buyers turned to sellers pushing the price sharply to the downside.
The move lower did not end until the 100 day moving average was broken down at 0.6782. The low price reached 0.67513 before snapping back higher modestly and closed back above the 100 day moving average.
In trading today, the price based near the 100 day moving average and rose up to retest its 100 hour moving average (see blue line in the chart above). Sellers leaned against that moving average level and put a halt to the rally for the day.
For the second time in two days, sellers leaned against a key moving average (like they did against the 200 hour/200 day MAs the day before), and the price rotated to the downside.
The subsequent fall to the downside saw the NZDUSD price break back below the 100 day moving average. However, the price has since seen a rotation back higher.
The current price traded above and below that moving average as the trading day works to an end. Tomorrow – although the forex market will remain open – the volatility should be much less as result of Good Friday.
What next?
With the 200 hour moving average stalling the rise yesterday, and the lower 100 hour moving average stalling the rally today, that keeps the sellers more control. The best case scenario for the sellers would be to move back below the 100 day moving average, will below the low today which was also a swing low from March 16 at 0.6766, and then take out the low for the week at 0.67513 with the swing low from March 15 at 0.6728 the next downside target. Those would be the steps in the downward direction.
Conversely if the buyers end up leaning against the 100 day moving average and pushing back to the upside, ahead of the 100 hour moving averages the 0.6805 to 0.68117. Swing area get above that and then the falling 100 hour moving average and the door opens for further upside probing.
Having said that, the price is still well below the 38.2% retracement at 0.6859 and the falling 200 hour moving average currently at 0.6874. Both those levels would need to be broken to give the buyers more confidence.
So the roadmap is laid out. The sellers are more control below the 200 and 100 hour moving average, with swing lows the next downside targets.
