USD/JPY
The US dollar initially rallied on Monday but turned around to form a negative candle. The negative candle is the result of overexertion and quite frankly and overextended market. I believe that a break down below the bottom the candle probably signals a pullback that we have long needed. I think that there is a significant amount of support just below, and most certainly at the 107.50 level. Because of this, I believe that the buyers will return again and again based upon “value” in a market that has broken out rather significantly. Given enough time, I believe that the trend has completely changed to the upside, but these affairs are normally choppy to say the least. The massive return of buying pressure after the surprise election of Donald Trump signified to me that we were done selling off this pair on the longer-term charts, and then completely found the base that we were looking for.
NZD/USD
The New Zealand dollar broke higher during the day on Monday, using the 0.70 level as a springboard. However, there is a previous uptrend line just above, which was the support in an uptrend in channel. Because of this, I think there could be a significant amount of resistance just above but I need to see a daily candle that show signs of exhaustion. A daily close that looks along the lines of a shooting star would be a nice selling opportunity, as we reach down towards the 0.70 level underneath.
Break down below the lows from the session on Monday should send this market looking for much lower levels, and of course the US dollar has been strengthening overall which weighs down the value of commodities which of course the New Zealand dollar is highly sensitive to. Ultimately, I think that the market continues to break down, offering selling opportunities again and again. Ultimately though, if we can break above the 0.7150 level, the market should continue to go higher.
