The NZD/USD pair fell for the session on Monday as the risk off trade was prevalent around the world. However, it wasn't much of a selloff, and as such we saw a bit of a bounce by the end of the day. The resulting candle was a hammer, and this shows that support is picking up for this pair.
The recent action in this pair has seen a breakdown out of the consolidation range between the 0.8250 and 0.8450 levels. The move was indeed bearish, but the overall picture is bullish. The recent fall bounced from the 38.2% Fibonacci level, and we also have the 50% level just under the 0.8000 level as well. This offers a lot of support in a very small area. The pair has been bullish for the last couple of years, and this most recent action figures to merely be a pullback in the big scheme of things.
The 0.80 level and the 50% retracement below it (0.7950) is our line in the sand. It is below there that we have to reassess the situation in this pair. Until then, we see it as a buy only market, and use these pullbacks to get into the market on the long side.
The Kiwi is heavily influenced by what goes on in the commodity markets, and as such the FMOC statement will more than likely have a sizeable effect on this pair. However, we feel that any pullback will only be a temporary one as the Federal Reserve isn't the only central bank that has been easing lately. The Bank of Japan, Bank of England, and the European Central Bank are all easing, and this should continue to propel commodity prices on the whole.
With this in mind, we actually hope there is a pullback during the session. This will allow us to enter this market on the cheap, and we will not hesitate to buy this pair as long as it can stay above 0.80 as a general rule. The breaking of the top of the Monday session highs is also a buy signal, so we would even consider getting involved if that happens as well. We will not sell this pair until the 0.7950 level gives way on a daily close, so at this point we will simply wait for a potential pullback and buy the supportive candle. If not - we will buy the break above current levels as it would show continuation of strength.
NZD/USD Forecast March 13, 2012, Technical Analysis
NZD/USD Pivot Points (Time Frame: 1 Day)
Name S3 S2 S1 Pivot R1 R2 R3