• The New Zealand dollar has been all over the place during the trading session on Friday, as we continue to see a lot of noise in general.
• The 0.5950 level underneath is of course a significant support level, and it's an area where we've seen a lot of resistance previously.
• All things being equal, this is a market that I think is trying to find its bottom.
• That being said, the market has been in the same area for some time, and this means that we are “waiting for something.”

So, the question is, will it find its bottom? The 0.60 level is an area that if we can break above there, then the market could go higher, maybe in a bit of a short covering rally. It is worth noting that the 50 day EMA is starting to break down below the 200 day EMA, kicking off the so-called death cross, which is a longer term bearish sign, but really at this point in time, I think you've got a scenario where people are probably late to the party if they're just now starting to short the New Zealand dollar. But I do think what we will more likely than not see is a little bit of a bounce in order to short the market on signs of exhaustion.
 

On a Move Lower…

(Click on image to enlarge)

If we were to break down below the 0.5950 level, then you could see the New Zealand dollar dropping down to the 0.5850 level in what would probably be a very strong U.S. dollar across the board in the forex markets. It's worth noting that the New Zealand dollar is a commodity currency, and that of course has a major influence on what happens here. And therefore, I think you need to see a situation where traders are perhaps getting ahead of themselves and then maybe a long wick that 0.61 level then things may change but it would take a lot of work to make that happen.

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