The NZD/USD pair broke higher during the day on Tuesday, after initially trying to fall. The fact that we formed a shooting star on Monday suggested that perhaps we were going to try to break down below the support that is just underneath that candle. However, the fact that we broke the top of the shooting star course is positive for the New Zealand dollar. I don’t know whether or not this market can break out to the upside for any real significant amount time, but when I look at this chart I begin to think of a couple of things.
Where the first thing that I think of is the fact that we broke the top of the shooting star suggests that the sellers are starting to run out of strength. However, lets be honest here, the 0.70 level below looms large as far as psychological support. With that being the case, it makes sense that we would have to bounce in order to build up enough momentum to finally break down below that level.
Commodity markets
The New Zealand dollar is highly sensitive to the commodity markets, so as a result I think that it makes sense for the New Zealand dollar to be a bit volatile anyway. On the chart attached to this article, you see that I have a red line at the 0.73 region. That is the next major resistance that I can see on this chart, and as a result I think that is where we are going to head to the next. I don’t know whether or not we can get above there, but this bounce as I said before could send enough momentum back into the marketplace to finally break the New Zealand dollar down. It’s a bit early to suggest that perhaps the trend has changed, so I am only going to think about going long for the short-term, and towards the 0.73 level. If we can get above there, obviously I have to revisit a few things from a longer-term perspective.
