The NZD/USD pair fell during the majority of the session on Thursday, dipping down to the 0.8225 area. The bounce formed a nice looking hammer, but this is simply the next hammer or tight trading range for the market in a long string of them. That being the case, it looks more and more to me like this market is simply taking a break after the strong move higher, which is relatively common for markets that have been a bit on the parabolic side. That being the case, it's very difficult to imagine selling this pair, and as a result I will only buy the New Zealand dollar going forward.
That being said, even if we do fall, I do not see an opportunity to short this market as the 0.81 level should also be supportive. The 0.80 level should also be supportive, and as a result if we fell down there, I would be more than willing to buy a supportive candle in the general vicinity also.
Monetary policy out of Washington DC
Monetary policy out of the Federal Reserve will dictate where this pair goes more than likely. After all, if the Federal Reserve is going to remain very dovish over time, this of course is bad news for the US dollar, and should have money flowing into the commodity markets, which of course has an effect on the New Zealand dollar itself. Because of this, I feel that this market will go higher over the longer term, and eventually at the 0.85 level, the next large round psychological number that makes sense.
That being said, even if we pullback I suspect that there will be buyers below, simply because the New Zealand dollar had moved so far. That being the case, it's obviously a bullish pair, but we still have matters of timing to discuss. After all, the last thing you want to do is trying to enter the trade far too early, and then have all that trading capital tied up. On the other hand, if we get some type of bullish candle that breaks above the recent candles, I feel that this would be an excellent buying opportunity.
