By: Christopher Lewis
One of the favored commodity trades by currency traders is to buy and sell the Kiwi dollar accordingly. The biggest reason is that the currency will follow the general attitude of the markets, and not just a small amount of commodities. Because of this, if you see that most of the futures markets are positive, there is a very good chance that this pair will rise as well, and of course it works in reverse too.
The pair is a bit less liquid than the AUD/USD pair, so it is a good way to “supercharge” your returns as it tends to move much quicker because of the lack of volume. The pair also pays a nice swap as well, so holding onto it pays the investor to wait between surges.
Weekly and daily confluence
The pair looks very positive, but the recent action has been a bit soft. The pair fell, but as you can see, the 38.2% Fibonacci level held as support. This was especially important as the 0.81 level coincided with it as well, and this shows large money flowing into the markets as they tend to appear on the handles. The bottom of a recent consolidation can be found at the 0.8250 level, and this looks to be providing a bit of resistance as this pair bounced.
The 0.80 level is by far the biggest level that I am watching right now, as it was the site of a massive breakout, and being a large round number will more than likely attract a lot of buyers as we fall towards it. For me, as long as we are above this level, I am only going to buy this pair. If we break below it, I would be heavily short of this pair going forward as it would show me that something fundamentally has changed in the market.
.png "NZD/USD Daily 3/19/12")
The breaking of the top of Friday’s range is a buy signal for me, which for simplicity’s sake I am calling 0.8250, and will enter if the market reaches the 0.8275 level. I am not selling until sub-0.80 as mentioned before, and when I do go long, I would expect the 0.8450 level to be the first real challenge to the bulls.