NZD/USD had a very back and forth day on Friday as the commodity markets were fairly quiet by the end of the session. The world got a good Non-Farm Payroll number out of the United States, but the world seems more concerned with the situation in places like Europe at the moment. The demand for commodities could wane as a result, and as the Kiwi is highly sensitive to commodity prices, the pair would struggle to rise. The 0.78 level looks supportive, but the weekly candle is a shooting star. For the daily or lower time frames trader, this suggests that the pair is going to be better suited to scalping in the short term.
The 0.8000 level should continue to be very resistive going forward, and as long as we are below that level, you can’t “Buy and hold” this pair at all as it will struggle once it reaches 0.7900 or so. The pair formed a doji for the session on Friday, and this shows that the markets are trying to decide what to do next. The breaking of the bottom of this doji has us selling, but a break of the top would have us waiting as it is right below the start of massive resistance.
The 0.8000 level above could also give us a great opportunity to sell this pair at a major crossroads. The gap from November still hasn’t been filled, and this is something that almost never happens in the Forex markets. With that in mind, we expect to see it filled, and with the various headline risks out there, it doesn’t take much imagination to think of situations where this pair could fall.
The Dollar is well bid against most other currencies, and that could continue to weigh on this pair, although New Zealand itself isn’t doing poorly at all. (However, you have to wonder how long it would be before a global slowdown would change that.) With all of this in mind, we are selling a break of the Friday lows, or rallies that show weakness between here and the 0.8000 level.
NZD/USD Forecast January 9th, 2012, Technical Analysis
Originally posted here
