The NZD/USD has been in a macro downtrend since late July and early August. From a purely technical perspective, this week’s action has brought a premium shorting entry into view. There are several key events on the horizon that are capable of creating optimal conditions for the USD across the majors. If volatility picks up, we may get a shot to trade a solid level in the NZD/USD.

NZD/USD Technical Outlook

Late last week produced a proximity test of the .6800 level and a swing low on the daily timeframe of .6817.

NZD/USD, Daily Chart

A few of the key resistance levels moving forward:

• Resistance(1): 38% retracement of the current wave, .6965

• Resistance(2): 20 Day EMA, .6991

• Resistance(3): Bollinger MP, .7013

Bottom Line: If you have read any of my articles over the past three months, then you will know I am a big fan of convergence. In this case, we have three points of resistance within a 50 pip range.

A short of the 38% retracement gives us a solid opportunity to capitalize upon the prevailing trend. However, the trade management needs to be fluid. Timing will be everything for this trade’s success.

Shorts from .6960 with an initial stop above .7013 is the scenario. The initial stop is quite large with upcoming news events having the potential to enhance volatility. In the event that this trade is elected and moves heavily into the green before tomorrow’s U.S. Employment report, I will be looking to rack profits or move the stop to breakeven.

As always, trade smart and for tomorrow!