The NZD/USD pair rose during the session on Thursday, and even broke above the 0.84 level at one point in time. However, you can see that we pulled back and ended up forming a perfect shooting star. This is important for a couple of different reasons: the first reason of course is the fact that the shooting star is negative, but also we had formed a gap right at that level when we open this week. The gap now looks to have held as resistance. On top of that, I see a significant amount of resistance all the way to the 0.85 level, so it’s difficult to imagine that this market is going to have an easy time going higher.
Another thing you can look at is the AUD/NZD pair. (I didn’t technical piece about that today as well.) That pair show significant Australian strength over the New Zealand dollar, and you can use that as a gauge of relative strength if you want. Obviously, the currency that is stronger between the two will do better against the US dollar. The New Zealand dollar looks very sick all of a sudden, and as a result I feel that this market will in fact continue lower.
0.83
I think that the next significant support area is the 0.83 level, but truthfully we are more than likely going to head back down to the 0.8250 handle anyway. Below there, the market could go to the 0.80 handle, which is my longer-term target. I am initiating a cell position in the New Zealand dollar now, on a break down below the bottom of the candle for the Thursday session, which I am essentially calling 0.8350 for simplicity. I think that the writing is on the wall for the New Zealand dollar, especially considering that we are starting to have geopolitical headwinds in the headlines that will more than likely have money flowing towards the US for safety. Remember, the New Zealand dollar is considered to be a “risk on” type of currency, and with so many different headlines out there that are spooking investors, I think the New Zealand dollar continues lower.
