By FXEmpire.com
The NZD/USD pair initially rallied during the Wednesday session as the “risk on” trade continued, but by the time we reached the end of the US session, there was a lot of risk aversion back in to the markets as the GDP estimates for the United States were brought down. The fact that they were brings into question the ability for the global economy to continue to move forward, and this of course will affect the commodity trade.
As the New Zealand economy is so heavily influenced by the commodities that the country exports, this currency will often mimic the general attitude of the commodity markets as a whole. The action in this pair won’t necessarily follow a specific commodity like the Canadian or Australian dollars, but is a great barometer on how the market is “feeling”.
The 0.78 level continues to act as resistance, and the fact that the pair topped out at the handle makes us think that there will continue to be a lot of price action in that area to trade off of. The candle that formed as a result during the Wednesday session is a shooting star, and it should be said that the shape appeared at the perfect time.
The 0.75 level below looks supportive, so we think that any fall form here will have to contend with that level as well. However, the trend is clearly down, and a move could be exacerbated by panic or fear in the market. In fact, a full out panic will make the level irrelevant. The Greek elections going the wrong way could be a bit of a catalyst for example.
The braking below of the Wednesday range has us selling this pair, and if we somehow manage to break the 0.75 level, we would become aggressive Kiwi dollar sellers. The 0.78 level has several shooting stars that formed above it in May and this is a reason that we fully expect this level to hold for the time being as a “top” in the market. We are sellers in this pair only until the pair can close well above 0.78 to show a massive change of momentum.
Click here a current NZD/USD Chart.
Originally posted here
