The NZD/USD pair fell during the course of the session on Friday, almost completely taking back all of the gains from the Thursday session. This tells me that the market still is going to continue to struggle going higher. On top of that, you have to keep in mind that the Royal Bank of New Zealand wants to push this pair much lower. They had recently stated that they thought “fair value” was somewhere near the 0.68 handle, and therefore this market should continue to fall from here.
That doesn’t mean that there will be bounces from time to time. However, this grinding action will more than likely be followed by selling pressure eventually, but you have to keep in mind that we are at the end of the year and more than likely people won’t want to put in large positions.
Ultimately, I believe that the lack of bullishness in the commodity markets should continue to push this market even lower. Ultimately, it’s only a matter of time before we break down, and with the New Zealand dollar being so sensitive to commodity prices in general as well as risk appetite, it makes sense that this pair will continue to fall from here.
Continued bearishness, but patience will be needed
There will be continued bearishness in this pair, but I believe that a significant amount of patience will be needed as we are most certainly choppy at this moment in time. With that being said, it’s only a matter time before rallies offer selling opportunities on short-term charts, and longer-term charts offer selling opportunities as well, perhaps on a move below the 0.76 level. I also think that if we break down below the 0.75 handle, the “floodgates will open”, giving us a chance to continue to sell and aim for the 0.70 handle. That being the case, I am patient but I recognize of this is a “sell only” market as every time we try to rally the sellers step in and flex their muscles.
