The NZD/USD pair rose a bit during the Wednesday session, but managed to give back about half of the gains to form a shooting star. This candle is at the tail end of a fall, so it suggests that perhaps continuation of the pullback is in order. However, looking at the larger time frames, it is obvious that the NZD/USD pair is in an uptrend, and as such - we don't sell this pair at the moment.
The 0.80 level below should be massively supportive, and we expect it to come into play if this market falls below the bottom of the range on Wednesday. The breaking below 0.80 would be a massively bearish sign, although we don't expect it to happen. Conversely, if the market rises above the top of the shooting star - this is a buy signal as well, since it shows a real resolve to push prices higher. We are waiting for our opportunity to buy, and have both of these areas to watch as signals for us going forward.
With the central banks flooding the markets with easy money, commodities are a natural place for investors to run to, and this is what we believe will propel this pair forward. The Kiwi is highly sensitive to commodity prices and going forward we expect it to benefit from that relationship. The world will continue to look to other investments as a means to store value, and while the Kiwi is mainly agriculturally based, there are plenty of foodstuffs that should rise in value as well. This can be seen in the grains and dairy prices around the world.
Also, there is a higher yield in New Zealand, and this will continue to propel the rate of this pair forward as well. The play for us is to simply own this pair, but the question is where to get involved. The 0.80 level is our line in the sand, and we are long only above it. If we close on the daily charts below it - then we have to think sell. Otherwise, we are buying pullbacks.
NZD/USD Forecast March 8, 2012, Technical Analysis
NZD/USD Pivot Points (Time Frame: 1 Day)
Name S3 S2 S1 Pivot R1 R2 R3