The NZD/USD pair rose during the course of the day on Monday, but keep in mind that liquidity would’ve been a little bit thin during about half of the day. After all, the Americans and the Canadians were celebrating Labor Day, so as a bit of a false impression. I still think that the 0.84 level above is resistive, and I am still paying attention to the shooting star that informed on last Thursday. With that, I think that the sellers will come back into this marketplace and push things down, meaning that it’s only a matter of time before we can start selling.
Ironically, it is an announcement out of Australia that I’ll be paying the most attention to. With the Australians releasing their rate decision today, the accompanying statement will be parsed and scrutinized by the marketplace. The New Zealand dollar is heavily influenced by the economic situation in Australia, and as a result if the central bank still looks very timid, I believe that the New Zealand dollar will be sold off. On top of that, the breaking down below 0.84 is actually significant.
I believe that the resistance area above the 0.84 level extends all the way to the 0.85 level. Because of that, I don’t imagine buying this pair until we get above that level. Because of this, I am very bearish of this market, and would even consider selling a bearish candle above current levels. However, I think that we will ultimately break down below the recent low as that we’ve seen, meaning that we should then head to the 0.80 level given enough time. Between here and there, I would anticipate a bit of support at the 0.8250 level, but I do not expected to be heard shattering by any stretch of the imagination.
Going forward, I anticipate that the New Zealand dollar can be sold every time it rallies, and I anticipate that I will be doing exactly that over the next several weeks. If we do break above the 0.85 handle however, I believe that this market could easily go to the 0.88 level which is the top of the previous consolidation zone.