Weekly technical levels of NZD/USD for January 27-31, 2014

Weekly technical levels:

Idea about resistance and support:

• R3 and S3 are considered to be clear indicators of the maximum range of extreme volatility, though it is possible to pass them through. Pivot lines work well on the sideways markets as prices are most likely to be located between the R1 and S1 lines. Within a strong trend, the price is expected to be lower than the pivot point line and continue moving. If the breaking news released may affect the market, the price is likely to go straight through R1 or S1 and even reach R2 and R3 or S2 and S3.

Observations:

• If the trend is upward, then the strength of the currency pair will be defined as following: NZD is in uptrend and USD is in downtrend.
• Fibonacci retracement is used to determine accurate psychological levels of support and resistance. The period of time should be taken into account. Fibonacci is in a trading range; it looks like the trend is trapped and going up and down. If you sell or buy in the long term in this period, you will surely lose your profit.
• Stop loss should never exceed your maximum exposure amounts.
• As a rule, the market is highly volatile if the last day had a huge volatility.

The material has been provided by InstaForex Company – www.instaforex.com