NZD/USD Daily Outlook July 6, 2012

Christopher Lewis

NZD/USD had a back-and-forth session on Thursday as traders that we could not make a decision on the risk appetite of markets in general. This makes sense, as the nonfarm payroll number comes out later today, and this of course will rock the risk appetite of the markets currently. One of the biggest reasons of course is that everyone knows that Europe slowing down, as is the Chinese market, so now we need to see whether or not the US employment situation can sustain the economic growth that we have seen in America. If this level gives way, there's a real chance that we will see a pronounced economic slowing around the world.

With this being a commodity sensitive currency pair, it makes sense that with gold, silver, oil, and many other commodities falling during the Thursday session that this pair fell. It should be noted however that the candle at the end of the session is very neutral, and this leads to a fairly straightforward set up for the Friday session.

0.80

Without a doubt, the most obvious spot on this chart from a technical analysis point of view is the 0.80 level. For me, it looks like a very supportive part of the chart; the more importantly it looks like it has a lot of support below it as well. Because of this, I will be buying this pair only as long as we are above the 0.78 level.

NZDUSD Daily 7612

With the doji for the Thursday session, a break of the top of the Thursday range would be the easiest trade as it shows a continuation of the overall bullishness in this market. On a break of that top, I would be willing to buy and aim for the 0.82 level. However, if the pair breaks below the bottom of the candle, it should be noted that although bearish there is a ton of support all the way down to the 0.78 level. In this particular instance, I would be willing to buy but need to see some type of supportive candle between here and the 0.78 level. I would even be willing to use shorter time frames, as the reaction to the nonfarm payroll announcement tends to be erratic and short-lived.

Christopher Lewis

Christopher Lewis has been trading Forex for several years. He writes about Forex for many online publications, including his own site, aptly named The Trader Guy.

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