The NZD/USD pair rose during the session on Tuesday, closing above the 0.8350 handle. This of course was the signal that I had been looking for, and as a result I think this market will continue to go higher, based upon the fact that we have broken above a relatively significant resistance barrier. The real question now is whether or not we can get above the 0.85 handle, which I feel is the next destination for this market. Because of this, on a break of the highs from the session on Tuesday, I will be buying the New Zealand dollar.
That being the case, we have to keep an eye on the Federal Reserve as it looks unlikely to taper off of quantitative easing. This is a US dollar related story, and as a result I believe that this market will continue to appreciate over the longer term as traders try to diversify against the US dollar due to the massive quantitative easing that the Federal Reserve continues to do, and seems to be relatively stuck doing for the near-term.
Binary trade
This is a relatively binary trade for me. If we break the top of the candle from the Tuesday session, I think this market goes to the 0.85 level relatively quick. If we break down below the 0.82 handle, I believe this market heads to the 0.80 handle just as quickly. That being the case, this is a binary trade as far as I can tell, but if we do go higher, the real question is going to be the 0.85 level, and whether or not we can break above it. A daily close above the 0.8525 level is enough the get me to not only start buying this pair again, but hey need for a longer-term trade as I believe at that point in time the market would be heading to the 0.90 level. Going forward, I think that's what's going to happen, but it comes down to whether or not it's going to happen now, or later on this winter.
