The NZD/USD pair fell again during the course of the session on Wednesday, as it appears we now are heading towards the 0.65 handle. When we originally rallied that from the lows, you can see that we hit the 50% Fibonacci retracement ratio, and as a result formed a shooting star. It now looks as if the shooting star was the top of the bounce. Ultimately, that means that we should break down below the 0.65 handle. The fact that we are closing at the bottom of the candle for the session on Wednesday suggests that there should be continuation in this move, and as a result a break down below it is more than reason enough for me to start selling.
However, I think rallies at this point in time should be selling opportunities on signs of exhaustion. The 0.6750 level above should be massively resistive, and that of course should push this market lower. I would not be surprised at all if the 0.65 level offered enough support that causes the market to bounce.
Commodities
Commodities continue to struggle overall, and that of course works against the value of the New Zealand dollar as it is highly correlated to the overall attitude of commodity markets in general. Ultimately, the Kiwi dollar represents the psychology of commodity markets, and not specific markets. Because of this, I believe that it’s only a matter of time before we see massive correlation between not only this market, but precious metals, grains, and minerals in general.
The only way that I would consider buying this market is if we get well above the 0.6750 level, but that seems to be very unlikely at this point in time. Even then, I would be a bit hesitant to do so. On the other hand though, if we break above the 50% Fibonacci retracement level, that then becomes a longer-term buy-and-hold situation.
