NZDUSD: Watching 0.7040 for Directional Cues

Exactly one week ago the NZDUSD closed the day back above the 0.7040/5 area. The break came after the March 15th rally fell short of overcoming the region and the pair subsequently sold off on March 16th.

However, last Tuesday’s session appears to have closed back below 0.7040/5. This suggests that the Monday break above the area was a false move.

Furthermore, the final 72 hours of activity last week was once again capped by 0.7040/5 on a daily closing basis. The result was a weekly bearish pin bar, albeit not at a major swing high.

Fast forward to today, and we can see that buyers are once again challenging the level. But as you may well know, I don’t pay much attention to intraday breaks such as this. Where the pair closes the session at 5 pm EST is much more important.

For now, I’ll remain on the sideline until we have a clear indication of whether 0.7040/5 is holding as new resistance. If so, we could have a selling opportunity on our hands.

Otherwise, a close back above the area would pave the way for a retest of 0.7133. This level served as support on two occasions in the second half of February and again on March 1st.