The NZD/USD pair initially tried to break out to the upside during the session on Friday, but as you can see turned back around and fell drastically. We ended up showing a significant amount of resistance at the 0.75 handle, which of course previously had been supportive. The first clue of a further breakdown would have shown itself on Thursday as we formed a shooting star sitting right on support. That of course is a very negative sign, and the fact that the US dollar of course is the strongest currency in the Forex world has me thinking that this pair is going to go much lower.
Looking at the longer-term charts, I believe that the 0.75 level is massive support, and it has in fact been broken. The Reserve Bank of New Zealand continues to try to talk the value the Kiwi dollar down, waiting for a move as low as 0.68 which of course is what they believe it is fair value. Because of this, I believe that there will continue to be pressure on the Kiwi dollar in general, and compounded with the fact that the US dollar is so strong, this pair can only go down overall in my opinion.
Selling rallies
I believe that selling rallies will be the way to trade this pair going forward, as the next major support level is and until we get down to the 0.70 level, and as a result I believe that short-term rallies can be selling opportunities going forward and I will use short-term charts to find is entries. I have no interest in buying this pair, simply because I think that the US dollar will remain strong, and the fact that the New Zealand dollar is so highly correlated with the commodities market won’t help the value of it either. After all, the commodity markets or falling apart in general, and I believe that will be the case going forward as well. This should be a market that you can sell time and time again on the grind down to the 0.70 level. Using short-term charts is exactly how I’m going to sell.
