By FXEmpire.com
The NZD/USD pair fell during the session on Monday, to test the support level just below the 0.79 handle. This is the bottom the recent consolidation, and extends all the way down to 0.78 so we figured this is pretty strong support. With this in mind, we are not interested in selling the Kiwi dollar at the moment, even though we think that there is plenty of weakness out there in order to pay some type of short trade off of.
Alternately, buying this pair will be difficult but one has to think that the consolidation should continue. After all, we did see a nice surge higher before this consolidation, and that normally means that this is a pause not some type of trend reversal. Having said that, if you believe that the Kiwi dollar is going to rise over the next few weeks buying at this area would in fact be somewhat prudent.
We feel that this market is contained between the 0.8050 level and the 0.7880 level. In the meantime, we will simply plan is a range bound trade as the late summer months tend to be very quiet anyways. However, we manage to break down below the 0.78 level we would become aggressively short of this market. Alternately, we can see the exact opposite of the 0.8050 level, as we would be buying the Kiwi dollar hand over fist at that point in time.
The longer-term future of this pair probably is going to depend on comments of Federal Reserve over the next couple weeks. If the Federal Reserve looks likely to ease a bit, the commodity currencies should get a bid overall. The Kiwi dollar of course will be no different, and should accelerate it’s already up trending bias.
Having said this, we will watch the general risk appetite of the markets, and try to glean from it some type of signal for the future direction of the Kiwi dollar. We think that ultimately this pair should find some type of bid and its, but in till we break out of this range all trade should be considered very short-term, and profits taken when necessary.
Click here to read NZD/USD Technical Analysis.
Originally posted here
