The NZD/USD pair rose during the session on Tuesday, slamming into the 0.84 level. This is an area though, that has caused a significant amount of trouble for the buyers in this market. A perfect example would be the shooting star that was formed on Friday, as you can see we pierced the 0.84 level, but could not break out to the upside for any significant length of time. However, the shooting star also gives us a buying opportunity, as a break of the top of that shooting star shows a significant break out above resistance.
This of course will be accompanied by some type of bullishness in the commodity markets, as the New Zealand dollar is so highly leverage to soft commodities. However, most currency traders look at it as a general “gauge” of commodity markets in general, so it’s difficult to head it to anyone particular market such as wheat or cattle for example.
0.85 will matter.
If we do break out to the upside, don’t forget that the 0.85 level will matter as well. It won’t be as resistive as the 0.84 level has been, but there is a certain amount of psychological significance to that area. Because of this, be aware the fact that we will more than likely pull back slightly, but we think that will only bring in buyers as we retest region for support. As a classic technical analysis signal, it’s hard to believe that people won’t notice a breakout and pullback of that magnitude.
On the other hand, we could fall from here, but I believe that the 0.8250 level has shown enough support to keep the sellers at bay. After all, we could not get to the bottom of the consolidation area of this last time, and as a result it appears that the market is starting to pick up more buyers going forward. Selling is going to be an impossibility until we get below that level, which is something that is almost impossible at this point as far as I can tell.
