Why you never trust a late-December market move

Author: Adam Button | Category: Education

A look at the New Zealand dollar

The final minutes of January 2017 trading are here and it's clear that the bigger percentage gainer in the FX market this month was NZD/USD. The pair gained 5.67% in a steady but choppy climb from 0.6950 to 0.7340.

The trade was a tough one to see coming from a technical perspective.

In the second half of December NZD/USD broke below several layers of support from the November, July and late-June lows and finished the year near a six-month low.

But the late-December drop was a false breakdown.

It's a reminder that anything that takes place in a quiet, less-liquid time can't be trusted in the same way. Sometimes, it should even be faded.