The NZD/CHF pair initially rallied during the session on Monday, but as you can see we pulled back slightly. The 0.6350 level above is resistance, but more importantly I see that the market is very choppy on the way down. With fact, I think there’s a lot of noise above, and it is going to be difficult for the market to continue going higher with any real velocity. Also, you can see that I have marked on the chart a down trending channel, which so far has been working.
I believe that the downtrend should continue, especially considering that the New Zealand dollar is a “risk on” currency, and while stock markets in general are doing okay, the truth of the matter is that the commodity markets look horrible. New Zealand is of course a commodity economy, and that of course doesn’t help the value of the Kiwi dollar. On the other side of the equation, we have the Swiss franc which is a safety currency in general.
Continued bearishness
At this point in time, I am simply looking at selling short-term rallies, for short-term breakdowns. I do not expect this pair to offer a long-term trade anytime soon, as there is so much noise and volatility in this general vicinity. Ultimately, I think that the market is probably going to head down to the 0.60 level, which is the next major levels on this chart. Even if we break above the top of the channel, it is not until we get above the 0.65 handle that I would even remotely consider buying this pair. I think there are far too many fears out there to think about going long the New Zealand dollar against just about anything at the moment, so at this point in time I think that the trend continues to go lower. Ultimately, I think that this is a pair that although choppy, should continue to offer selling opportunities time and time again as we go much lower.
