NZD/USD rose during the session on Tuesday as traders bought risk around the markets. The Kiwi is always a favorite of currency traders when times are perceived to be good, and a currency that is sold off rapidly when there is economic trouble on the horizon. With the recent headline issues coming out of Europe, the pair has actually produced a fairly steady move up, which is somewhat counter intuitive.
The pair will also be heavily influenced by the commodity markets, and in particular the agricultural markets. The pair look like it wants to build momentum, but there are so many potential headwinds out there that the pair will more than likely have many issues in the near term.
The 0.8000 level above is the top of the next resistance area, and this could be a good place to look for selling opportunities if the markets get “spooked”. The gap from November is still open, and this almost never happens. Because of this, we believe that sooner or later we will get the gap filled, and this could be a good area to look for that move. However, there will be more than likely be a need to have some kind of bad headline to get the ball rolling in that direction.
Going forward, we prefer to own the US dollar in general as the safety trade looks set to continue to reappear in the next several months going forward. The situations in Europe will almost automatically force and exodus into the US dollar and US Treasuries on the whole. It is hard to imagine that the Kiwi will skyrocket in this type of environment, even if it does rise in value as it will have to climb the proverbial “wall of worry”.
We are presently looking for a daily or 4 hour exhaustion candle between 0.79 and 0.8000 in which to sell. An accompanying news event would help as well, but we can never really know when that will happen. The daily close above 0.8000 is what it would take for us to buy this pair now, as it has risen so much that getting involved at the moment is simply chasing the trade.
NZD/USD Forecast January 11th, 2012, Technical Analysis
Originally posted here
