Forexpros Daily Analysis - 01/08/2011
ForexPros Daily Analysis August 01, 2011
NZD-USD Still Bullish, If Overextended
Seemingly defying gravity, the New Zealand Dollar just keeps climbing higher. Its rally has been broad based and over the last few months, the Kiwi has appreciated substantially against most of the major currencies.
In some cases, the NZD made new all time highs.
Perfect example could be the US Dollar. After consolidating in May and June, the NZD/USD has been in an uptrend all of July, appreciating from 0.8109 to the current level of just above 0.8818. This is a new all time high, or more to the point, a post-float, or 30-year high for this pair.
At this point, though, the rally might be overextended. Not so much because of the exchange rate itself, but more because of the manner in which it got there. In recent days, NZD/USD accelerated and the curve of advance steepened considerably. As seen indicated by the secondary trendline, the price keeps rising at an unsustainable angle.
Technical indicators like the RSI and the Standard Deviation suggest oversold market conditions, increasing probability of a correction. The very tight trendline is a good tool to watch for a breakout, especially if accompanied by a bearish candlestick pattern. For now, the uptrend still drives the NZD/USD, but a correction may be near.
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Forex Trading analysis written by Mike Kulej for Forexpros.
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