The NZD/USD pair managed to bounce fairly hard during the session on Wednesday as the “risk on” attitudes came back into the fray. The pair is one of the most active in the “risk on, risk off” markets, and as a result has been pretty impressive in the scope of the fall lately.
The pair had been consolidating over the last couple of weeks though, and the move on Wednesday was a break of the top of the range at the 0.7650 level and shows that the pair wants to run a bit higher. This suggests that the “risk on” move in most markets will possible have a bit to go as well – especially when you consider how strong the candle for Wednesday finished. This certainly looks like a serious move in the making.
However, the overall trend is still down, and there are plenty of “risk off” headlines waiting to happen out there. This will always place a bit of suspicion on the rallies in this pair, and to be honest – I prefer to sell this pair on the whole. Regardless, I have to play the charts as I see them, and currently I see a rally about to happen.
0.78 And 0.80
The market looks like it wants to run, but there are a couple of levels above to worry about for the bulls. The 0.78 level looks like it could be resistive, and will more than likely produce some kind of barrier for the bulls to overcome. The 0.80 level is even more imposing, and I have a hard time believing that this pair will break above it.
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However, Ben Bernanke can change all of this today. He is testifying in front of Congress, and any mention of quantitative easing will send the Dollar bulls running, and the commodity markets and currencies racing higher. With this in mind, the next 24 hours should tell the case of this pair going either up or down for the next leg. If Bernanke doesn’t mention easing, there is a high probability that we break new lows and this would have me shorting aggressively. However, he didn’t get the name “Helicopter Ben” for nothing, so easing is probably coming and as a result we should see a short term pop.