The NZD/JPY pair had a volatile session on Thursday, as we initially fell, but turned back around to form a bit of a hammer. That suggests that we could perhaps get a bit of a bounce from here, and as a result of that I think that buyers will get involved in this market on a break of the top of the candle for the day. Nonetheless, I recognize that there is a tremendous amount of downward pressure on this pair right now, as the Japanese yen is much more likely to be thought of as a safety currency in times like this than somebody else trying to take advantage of risk appetite in the New Zealand dollar. Remember, the Kiwi dollar is highly sensitive to the commodity markets, so given enough time the bearish pressure in global markets has a drastic effect on this currency.
Short-term Buying Opportunity?
I think this might be a short-term buying opportunity, but quite frankly I am a hard time believing that this market will sustain any type of serious rally. I think that the rallies will form a resistive candle that we can eventually start taking advantage of for much more profit than the short-term buying opportunity that may or may not present itself.
The cluster that formed during the summer just below should continue to offer a bit of support, and more importantly a bit of volatility. I think, because of this, the “easy money” has been made for the sellers at this point in time. If we break below the bottom of the candle for the session on Thursday, we will more than likely try to get to the 75 handle but it is going to be a bit choppy. Is because of this, I actually prefer selling the aforementioned rallies, but recognize that short-term traders may be able to take advantage of a momentum play to the upside.