On Tuesday, at the GlobalDairyTrade auction dairy prices grew by 14.8% thus giving hope that prices may have stopped their fall.
However, poor macroeconomic data, unemployment growth, falling rates of economic participation, reducing exports to China and the possibility of a delay of the interest rate hike in the US may force the RB of New Zealand to cut the interest rates further.
Thus, the descending trend in the pair is going to continue in the medium-term and any local strengthening in the pair should be considered as an opportunity to open short positions.
The pair is moving within the range between the levels of 0.6765 and 0.6510. On the 4-hour chart, the price reached the resistance levels at 0.6610 (EMA144) and 0.6645 (EMA200).
OsMA and Stochastic on the 4-hour chart remain near the zero line. On the daily chart, the indicators give buy signals.
The breakout of the level of 0.6645 (EMA200) would open a way to 0.6700, 0.6765. The level of 0.6890 (50% Fibonacci correction to the pair growth from March 2009 to July 2011) is the highest where the correction can go. Only the price consolidation above the level of 0.7345 (38.2% Fibonacci) would resume an upward medium-term trend in the pair.
The breakdown of the level of 0.6435 (61.8% Fibonacci) would allow the pair to fall to 0.6000 (2006 lows) and 0.5000 (2009 lows).
- Support levels: 0.6500, 0.6435, 0.6400.
- Resistance levels: 0.6610, 0.6645, 0.6700, 0.6765.