Selling opportunities in the kiwi

The New Zealand dollar seems to have found some stability after a period of underperformance, with some of the bearish momentum coming out of the market.

kiwi
Source: Bloomberg

I don’t feel this is a situation where the fundamentals have changed at all but the currency was showing signs of being oversold. AUD/NZD, for example, rallied from near parity almost uninterrupted all the way to the $1.1300 region. The pair hit resistance in that region and has since pulled back a touch, slipping below the $1.1200 level.

Near-term support comes in at $1.1129, which is the 23.6% retracement of the most recent leg higher. The next level of support comes in at around $1.1000 – the 38.2% retracement – and also coincides with an uptrend support line that has been in place since the pair tested parity.

I feel traders could use dips in the pair as a buying opportunity, particularly as it has dropped out of overbought territory.

AUD/NZD
Click to enlarge

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