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

This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer and quarterly summary.