The NZD/USD pair fell most of the session on Monday, but as you can see bounced enough to form a hammer. This of course is a bullish sign, but we have a shooting star the day before so that tells me that there is more or less a bit of confusion. However, further adding its influence on the analysis is the fact that the 0.85 level is just above, and it of course is massively resistive as it is a large, round, psychologically significant number. Because of this, I look at the shooting star and hammer as a sign of bullishness rather than bearishness.
The reason I believe this is that the perfectly formed a shooting star on Friday should have brought the sellers out. However, they were sent away, and we have now shown that the market is willing to buy the New Zealand dollar on pullbacks. On top of that, the 0.84 level just below is significantly supportive as well, so with that being the case, I see no reason to even think about selling this market. Quite frankly, I see a significant amount of support down to the 0.8250 level, meaning that this is a “buy only” pair at the moment.
0.90
Looking a longer-term charts, I believe that we break the top of the shooting star we could end up at the 0.90 handle. However, the market won’t get there immediately, and as a result it should offer plenty of buying opportunities going forward. At the end of the day, I believe that this market is about to begin a fairly significant bullish move, just as the Euro is looking to do against the US dollar. In other words, we could see a significant “risk on” situation coming soon. Because of this, I feel that on the break of the shooting star, you can build a core position in this market and add to it going forward every time we dip in show signs of support. Ultimately, I believe that the New Zealand dollar is about to become one of the better performers in the Forex world.
