Currency Currency
by ForexNewsNow Team on November 3, 2010

Kiwi dollar enters choppy seas

New Zealand flagNEW YORK (Forex News Now) – While FX traders pushed the Kiwi up and above the massive resistance area of the “.75 handle” last week, the pair has entered an area of massive historical consolidation. In the past, consolidation has been the order for this pair between the .75 and .80 area.

FX traders managed to push the Kiwi dollar up last week, and the pair has seen another round of buying, but looking at the bigger picture, the picture looks a bit on the weak side for the short term.

Notice on the attached chart the divergence of the MACD, as the last high of the indicator is higher than the recent one. Since the highs are not matching up with the highs of price, often this is a leading indicator of a pullback coming. FX traders around the world use divergence as a possible indication of what could be coming. It should be noted though, that divergence is a secondary indicator, not a primary one.

Of other note to FX traders will be the long wick that is forming with the day’s candle. This shows that exhaustion might be setting in for the pair, and that a pullback is needed.

A catalyst for that pullback could be coming at 21:45 GMT, as the Kiwis announce their unemployment number for the third quarter. While it is expected to come in at a change of 0.5%, and an unemployment rate of 6.7%, any number higher could be enough to push this pair into the direction suspected by the technical analysis. On the other hand, a lower number could push the pair higher into the consolidation zone. With so many announcements coming over the next few days, this one might be overlooked a bit however.

The Kiwi has been playing second fiddle to the Aussie for quite some time now, and this chart doesn’t do much to suggest that the pattern of the antipodeans will change anytime soon. The Kiwi simply won’t outdo its Australian cousin.

NZDUSD Nov 3

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