NZD/USD (weekly chart shown above) displays relentless weakness that has been firmly in place since the middle of July. The bearish trend is firmly in place but price may find some tentative support from the 200-weekly Simple Moving Average (SMA). In addition to the dovish comments that signaled the potential for no rate hike until April 2015 from the Reserve Bank of New Zealand, kiwi weakness has also stemmed from the recent weakness that hit commodity prices.
Price action is currently close to trading at the 50.0% Fibonacci retracement of the longer term trading range of .7500 to .8850. This level current resides around the .8100 handle. If this is area has a daily close below further downside may target the .7750 level. If we do see a tentative rebound, limited upside may target the .8450 zone.
The trade: Sell NZDUSD at .8235 with a stop loss at .8285 and a take profit at .8135. The Risk/Reward Ratio is almost 1:2.
Edward J. Moya
WorldWideMarkets Online Trading