The NZD/JPY pair fell during the bulk of the session on Tuesday, testing the 86.80 region. However, as we have a New Zealand employment number announcement coming out during the session today, the fact that the New Zealand dollar would take a little bit of a break wouldn’t be that big of a surprise in my opinion. In fact, I think that the market is essentially waiting to get that announcement before trying to make a move higher.
Yes, I see that it has sold off recently, but ultimately I think it’s only a matter of time before we see the buyers step back into place, especially considering that we are getting close to the end of the consolidation range as the 86 level has been so supportive. I think that any type of supportive action in that region has to be considered a decent buying opportunity, as the risk to reward ratio is so good.
Summer time trading could make range trading very simple.
The fact that we are in the dead of summer could make this range trading even easier, simply because the markets will have the wherewithal to make a massive move in one direction or the other. A move below the 86 handle of course is very negative, but I don’t know that we will see that in the short term. We could just get a nice bounce from here that could be capitalized on, as the range is obvious to everyone out there.
On the other hand, if the market breaks down below the 86 handle, I think that the 85 level will be tested almost immediately. That area should be rather supportive as well, so I would even be willing to buy a supportive candle in that vicinity as I think we could use that as a springboard. If we get below that level, we could go much lower, perhaps testing the 82.50 level after that. At the end of the day though, I still believe that the consolidation is probably what we are going to see a continuance of, and as a result I am bullish.
