The NZD/USD pair fell on Friday after initially surging higher. This was in reaction to a sudden "risk off" attitude of currency markets. The action was very strange, as it both triggered by orders of the top of the Thursday hammer, but then turned around and broke the bottom of that same hammer them triggered sell orders. With this in mind, the 0.82 level began fairly significant support, and I think that this pair will continue to have buyers in this general vicinity.
However, the fact that we did dip down well below the 0.82 level makes me think that eventually we will grind lower and down to the 0.80 handle. This pair will continue to react to the risk attitude around the world, and that is probably the one thing you have to pay attention to if you are involved in this currency pair. It's a simple "risk on, risk off" equation in this market, and as long as that is relatively clear to you, this pair should be a good one for trading.
The 0.8350 level looks to be the ceiling in this market at the moment, and I don't think that it will be broken in the short-term. Of course, the Federal Reserve continues to print money like it's going out of style, and this of course will eventually work against the value of the US dollar.
Patience will be crucial
Being patient in this currency pair is probably going to be the way to go. In fact, I am not necessarily interested in shorting this pair unless there is a very obvious "risk off" type of attitude in the markets. Perhaps a negative headline or something to that effect could get me to sell, but more than likely I think this pair will grind lower and run higher.
Since the path of least resistance in this market is most certainly higher, that is the direction I would rather be and as such I am willing to wait for supportive candles in which to buy this market. I would pay special attention to gold and stock market indices as a guide to how this currency pair will move. In fact, the correlation between the Kiwi dollar and the S&P 500 has been relatively strong this year, and in fact I would use it as a proxy for that particular index in general.
