The New Zealand dollar rallied a bit on Wednesday to reach above the 0.68 handle. At this point, the market has been forming a huge rounding pattern, so it would be interesting to see whether or not we can turn around and change the overall trajectory. It certainly looks as if we are going to make an attempt to recover. The 50 day EMA sits above at the 0.6877 handle, so that is your next target, and if we can break above there then we can really start to move higher.
It is worth noting is that we did get a little bit of a pullback this last time and it was nowhere near as deep as the ones before it. That generally means that attitude is shifting to the upside, but we will have to wait and see. This time of year is very illiquid so you can only read so much into it, but I suspect by the end of next week we should know exactly what this pair is going to do.
The market will continue to be very noisy, but that is typical for the New Zealand dollar. Pay attention to risk appetite around the world because if it continues to pick up, that will do quite well for this currency pair. As long as people are willing to put risk out there, it is very likely that this pair will rally and go looking towards higher levels, perhaps even as high as 0.70 above. On the other hand, if we turn around and break down below the 0.68 level, then it is likely that we will go much lower, perhaps reaching down to the 0.67 handle rather quickly. Keep in mind that the New Zealand dollar is highly sensitive to commodities as well, so you have to pay attention to them and how they are behaving.
The market had been falling for what seems like forever, so now it looks like we're going to try to turn things around and rally again. This will be a longer-term prospect, and it is not likely to happen overnight. To me it looks like it is probably only a matter of time before we try to regain some ground and pick things up going forward. Be cautious about your position size, but once the trade starts working on your favor you can go ahead and add.
