The NZD/USD pair went back and forth during the session on Tuesday, but couldn't necessarily make any real move in one direction or the other. This is a fairly quiet session, but the one thing that it does tell me is that the market is very comfortable hanging about the 0.65 handle. When you are in a strong downtrend like we have been in for some time, that’s not good news for the front currency. I believe that the New Zealand dollar is getting ready to break down below the 0.65 handle, and a move below that level is reason enough to start selling yet again.
Looking at this chart, even if we did rally at this point in time I have no interest in buying. After all, the New Zealand dollar is highly sensitive to various commodity markets around the world, as it is simply a “barometer” of how the markets feel about commodities and risk in general. Because of this, I feel that the market is going to really struggle to hang onto any gains and any time I see a rally from here I will be thinking “value” as far as the US dollars concerned.
How much lower?
So the next question of course is how much lower are we going to go? Don’t really know obviously, but I would say that a break down below the 0.65 level has me aiming for 0.6250, and then 0.60 after that. We do have to start thinking about the fact that a lot of these trends are getting fairly long in the tooth, so paying attention to the longer-term charts is going to be paramount at this point in time. Right now we don’t really have any signs that the trend is trying to reverse, but I will of course keep you abreast of anything that gets me worried about it. In the meantime, I sell below 0.65, and I of course sell rallies that show signs of weakness as well. In fact, I don’t even have a scenario in which I buy this pair unless of course we were to break above the 0.70 handle.
