- I think this is a market that has the potential to bounce again, but I also see that there is a wall of resistance just waiting to make its presence known.
- With this, I am cautious and expect a lot of chop in this important region.
The New Zealand dollar has broken below the 0.60 level during the trading session on Thursday, but as the Americans are coming on board, we are starting to see the US dollar sell off just a bit. All things being equal, I think this is a market that has the potential to bounce again, and I think that bounce on any signs of exhaustion could be a nice selling opportunity.
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We have been hanging around between the 0.60 and 0.61 level for a while as we are going sideways. If we break down below the lows of the Thursday session, then we could go looking to the 50-day EMA near the 0.5855 region.
Sensitivity to Risk Appetite
Ultimately, the New Zealand dollar is going to be weaker than the Aussie dollar, so if you start to see the Australian dollar fall apart, then that gives you an opportunity over here, I believe. If we turn around and break above the 0.61 level, then we could go looking to the 0.6250 level, maybe even 0.64.
Keep in mind that the New Zealand dollar is very much sensitive to risk appetite, and if risk appetite starts to peel off a bit, then you have a scenario where the Kiwi dollar might sell off. Conversely, if risk appetite starts to pick up, then you should see the US dollar fall and the New Zealand dollar and others like it pick up. This is a market that just got too overly overbought and now is trying to figure out what to do next.
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