The NZD/USD pair initially gapped higher at the open for the week, but as you can see the Monday session then turn things back around and we fell. However, the market did find support below, and we ended up forming a hammer. On this chart, I have a horizontal line at the 0.85 level, which I feel is obvious support, and another one just below that at the 0.84 level which I feel is the bottom of the support “zone.” With that, I feel that there is a massive amount of support below, and the fact that we formed a hammer suggests to me that we are at least going to bounce, if not continue the consolidation that we had seen earlier in the year. If that’s the case, we could see this market go back to the 0.8750 level without too many issues.
Summertime trading gets to be boring, but can be profitable.
Summertime trading gets to be fairly boring, but it can be profitable. We tend to get very range bound, and if we enter this range again, the New Zealand dollar will suddenly become one of my most favored currencies. There are a couple different reasons the think this, but one of the best is that it is such a well-defined range. On top of that, the leverage requirements are typically lower for this currency pair than many others, see you can really maximize your potential gains with the right setup.
It is not until we break below the 0.84 level that I would be concerned about the market falling apart, although I recognize that it could be uncomfortable being long of this market while we pullback. However, it’s really up to you will Leverage use, and if you are not comfortable using high leverage, that’s fine. There is a certain amount of money to be made going back and forth, regardless of the position size, and as a result this could be a nice trade for the next five or six weeks, simply buying and selling back and forth.