The NZD/USD pair fell during the session on Monday, as the selloff of risky assets continued. However, by the end of the day we did see a significant bounce in the New Zealand dollar, and as a result we are closing with a hammer right around the 0.7750 level.
That being said, I think a lot of people were going to start buying this pair if we can break above the top of the hammer. That certainly is the technical signal to start buying, but I think that perhaps the best route to take will be to simply wait for the market bounced high enough to bring the sellers back into play. After all, New Zealand is heavily leveraged to Asia in general, and we've seen what's been going on there lately.
Sometimes China is a strength, sometimes it's not.
Although New Zealand isn't as highly leveraged to the Chinese economy as the Australians are, the truth is that they do tend to move in tandem. With that being said, I know that a lot of concerns out there flows around the idea of the antipode economies suffering at the hands of lack of demand out of mainland China. Going forward, I think this will continue to weigh upon the New Zealand dollar, and I think rallies going forward are more than likely going to be excellent selling opportunities.
Looking at the 0.80 handle, you can see that there is a large amount of noise in the general vicinity. Is because of this that I think a move higher will more than likely struggle to get above that general vicinity. That being the case, I plan on simply letting this market "come back to me", and then start selling aggressively in that general area. On the first signs of weakness, be it a shooting star, and outside bearish candle, or just simply a failure to break above the resistance area, I am more than willing to not only sell, but start adding on to the position relatively quick. This is mainly because I think a lot of the "support" that you are seeing in this pair is more likely a symptom of the US dollar taken a break, not the New Zealand dollar suddenly strengthening.
