By FXEmpire.com
The NZD/USD pair bounced on Friday as the oversold condition finally caught up with the bears. However, the trend is most certainly down, and the weekly chart looks absolutely horrible. The 0.75 level was a natural place to see a bounce, and because of this we are flat of this market.
However, as the Kiwi dollar is so very highly correlated with the commodity markets, we will be watching those as well as this chart in order to find a place to sell – higher than present levels. The agricultural commodities can have an influence on this pair, but the overall sentiment is generally what drives the Kiwi. As a side note, milk, beef, and grains are all major exports from the country of New Zealand.
The 0.78 level above looks very resistive as does the obvious 0.80 level. On a sign of weakness in either of those areas, we would be more than happy to sell. The shooting star is a favorite candle of ours to trade, and one of those at either of these levels would be the ideal set up for us. However, we don’t live in a perfect world, or a perfect market. Because of this, we are willing to sell on signs of weakness in large red candles too.
The recent sell off had been brutal in this pair, and this is nothing new for the Kiwi. However, when you see a move that goes almost non-stop for a couple of weeks you are very likely to see a bounce and this is exactly what we think this will turn out to be in the end as nothing has fundamentally changed in the global economic situation.
A break of the 0.75 level on a daily close will also be a massive sell signal for us as it would show a complete capitulation by the buyers. As for joining those buyers, we would have to see a daily close above the 0.80 level – something that isn’t going to happen in the near future as we as so far below.
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Originally posted here
