By FXEmpire.com
The NZD/USD pair managed to surge higher during the week and especially the Friday session as the European Union came up with an outline to steady Spanish banks and support Spanish and Italian bonds. With this being said, a lot of the risk adverse traders out there begin short covering, and Friday saw the massive rally in order despite this market higher.
The Kiwi dollar did manage to break the top of the shooting star from the previous week, and this is normally a bullish sign. This is not to say that it can’t continue higher, but it must be said that the 0.80 level has offered enough resistance to repel prices. Because of this, it appears that the market is starting to run into serious resistance and may struggle from this point forward. This leads us to believe that perhaps this was more short covering and loss bullishness of the Kiwi dollar and commodity markets.
With the 0.80 still a major resistance point, this pair should struggle to go higher and definitely well at the 0.82 level. On a break lower and clearing the lows from the previous two weeks, we should see a fall back down to the 0.75 level as the market aims for support down there. The fundamental picture still isn’t strong for commodities, as even with this solution of sorts in Europe, it does nothing for demand. As the New Zealand dollar is a commodity currency, it will track the overall feeling and attitude of the commodity markets on the whole.
All things being equal, a break of the top of last week’s shooting star would have been enough to get us long. However the fact that 80 is there as well is something to consider and keep us from getting overly bullish. If we were to clear the 0.82 level, we would consider going long at that point in time but suspected that will be very difficult to accomplish. Because of this, we are looking for weakness to sell in general.
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Originally posted here
