By: Christopher Lewis
The NZD/USD pair has been a tough one to trade lately. The market has been pushed around between the “risk on, risk off” theories. The commodity markets have been reacting to various headlines coming out of China, Europe, and elsewhere. The worries about global slowdowns continue to plague the entire commodity complex, and as the Kiwi dollar is very sensitive to the overall sentiment of commodity markets, the pair has been choppy.
The action on Thursday saw the pair fall overall, and the candle formed for the day is a hammer. This shows that the pair did find some support as buyers came back into the market to buy the Kiwi dollar on the cheap, and shows that perhaps the selloffs have been just a bit overdone.
The NZD/USD pair pays a positive swap, and traders love it because of this. The pair thrives in a stable market, something we don’t have enough of these days, and as such it is a good pair to hold when the markets are calm. This is exactly what I need to see in order to buy and hold this pair, which is what I prefer to do over time.
38.2% and 0.81
The hammer formed at the 0.81 level, which also happens to be at the 38.2% Fibonacci level. This is a double-whammy as far as I am concerned when it comes to this possible buy signal. The breaking of the top of the range for the Thursday session signals a bullish move to me, and I would be long. However, as mentioned above, I prefer to hold this pair which is something I can’t condone presently. Instead, on a move higher I want to take profit at 0.8250 as that was the bottom of the consolidation above, and should prove to be resistive going higher.
.png "NZD/USD Daily 3/23/12")
The commodity markets are going to be vital to see how the Kiwi trades. If we get a couple of “risk on” days, this pair will rise. But even in that scenario, I don’t see a sustained move at the moment. I think we are heading into range bound conditions in the pair.