By FXEmpire.com

The NZD/USD pair managed a bit of a bounce for the session on Tuesday after falling towards the 0.75 support level again. The recent action has been very consolidative, but this candle formed a hammer, and this suggests that it is possible that a lot of pressure is starting to come into the market from the buy side. If this is the case, it is still counter trend.

The level is an obvious support area, and a bounce after this fall wouldn’t be uncalled for by any measure. The pair has been sold off massively as the world continues to worry about global growth. After all, the New Zealand dollar is highly correlated with commodity markets, which of course are highly dependent on global economic demand. In this recent environment, it is no wonder that the Kiwi has suffered.

The 0.75 level is an obvious place to see support as the psychological significance of the number cannot be underestimated. Large round number like this always tends to attract a lot of attention, and this will have many traders battling it out at this point. The fact is that the biggest detriment to global growth at the moment is the situation in Europe, and it shows no real solution in the near term. Because of this, we are bearish just about anything to do with risk, and the Kiwi is no exception.

With this being said, we do recognize the serious potential of a bounce at this level, and a breakout above the 0.77 level would signify this as happening. However, the trend is decidedly down and the headline risks out there are pretty negative. With this in mind, we are only selling this pair overall, and only when the set ups present themselves.

The 0.78 level would be the first place we would expect resistance in this pair if it were to break out. The next major one is the 0.80 level, and it is there that we would expect serious resistance. On this breakout, if it were to happen, we would sell resistive and weak candles all the way up to the 0.80 level. If the pair breaks down and makes a fresh low – we are aggressively selling this pair.

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Originally posted here