The NZD/USD pair initially fell during the course of the session on Tuesday, but as you can see found enough support to turn things back around and form a hammer. This of course is a very bullish sign, but ultimately I still believe that this market is very much in a downtrend, and as a result I feel that it’s only a matter time before the sellers come back into this marketplace. As you can see, I have a yellow dashed line at the 0.6750 level, and I think that level is very important.
With the hammer being formed, it looks as if we will probably try to reach towards that area. Between here and there, we think that there will be plenty of resistance, which of course should form some type of negative candle in order for us to start selling again. I believe that it’s only a matter of time before a resistive candle appears, and I will jump all over it as the New Zealand dollar is one of my least favorite currencies.
Selling rallies
The only thing I can do at this point in time is sell rallies, simply because there far too many reasons the think that this pair will continue to go lower. I recognize that the New Zealand dollar is highly leveraged to the Asian economies, and they of course are suffering at the moment. With this, it’s probably only a matter time before any relief rally get squashed. I believe that the 0.65 level is going to be massively supportive, and that sooner or later we can see this market can get broken even lower. If we do break down below that level, we should then head to the 0.6250 level. At this point in time, I have no interest in buying the New Zealand dollar, because quite frankly commodities look very sick at this point in time. The US dollar continues to be favored overall, and that certainly won’t be any different here.
