Is The NZD/USD is Looking a Little Toppy?
The NZD/USD has been relatively strong in the last few weeks, but it appears we might be getting a bit top heavy.
In reality it hasn’t just been the Kiwi that has seen a bounce. All the commodity currencies have been relatively strong.
Both the AUD and CAD have found a degree on buying, certainly outperforming during periods where risk-on is all the rage.
The fact that the USD has fallen back recently has helped contribute to the run, but the chart of the NZD/USD is starting to look a bit toppy for me.
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The Kiwi Outlook
We’ve tested the 0.6850 level three times now and each time we’ve not only failed, but we’ve made a lower high.
To me that is a sign of weakness and tells me that there are sellers there.
If we crack the 0.6780 level to the downside then we might very well flush lower. I wouldn’t be adverse to taking a starter short around current levels with a stop above the most recent high.
Add in on a crack of the low and I think we might have an OK trade. Of course, the X-factor at the moment is the USD, but the fact that the NZD has weakened in-line with the USD, suggests to me we might be weak here.
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