The NZD/USD pair fell again during the session on Friday, but as you can see remains above the 0.85 level. This level I have marked on the chart is a significant support area, and as a result I feel that a lot of buyers will step into this marketplace at that area. With that in mind, I am looking at this market as a potential buying opportunity, but I don’t have the supportive candle that I’m looking for in order to get involved. The longer-term trend seems to be on in the New Zealand dollar anyway, so the fact that we’ve gone sideways over the course of the last couple of months really isn’t that big of a surprise as the market needed to take a rest.
In fact, the New Zealand dollar typically will do this. It simply goes higher or lower, and then grind sideways for a long period of time, and then has an impulsive move again. With that, I feel that sooner or later we will breakout to the upside, but we have no idea how to know exactly when that will happen. Ultimately, I believe the top of the consolidation area is somewhere near the 0.8750 level.
Breakout for longer term move?
A move above the 0.8750 level would signify a move higher, and more than likely a move to the 0.90 level. I think though that if we get above the 0.8750 level, we will ultimately go much higher, and that the 0.90 level will simply be a stop along the way. If we get above 0.90, it’s probably only a matter of time before we go to the parity level, which is something that may seem a bit extraordinary too many of you but I remember how just a few short years ago the idea of parity in the Australian dollar versus the US dollar was laughable.
With all that being said, I have no interest in selling this market now. I think that there is plenty of support all the way down to the 0.84 level anyway, as the 0.85 level is so supportive it’s probably more of a “zone”, than anything else.
