Chris looks at the marketplace for Wednesday and the attached video as we present our NZD/USD Forecast. The New Zealand dollar fell initially during the course of the session on Tuesday, but found enough support below the 0.68 level in order to turn things around and form a bit of a hammer. With that being the case, the market looks as if it could bounce from here, but quite frankly we think this is an opportunity to sell at a higher level. If we break higher and above the top of the hammer, we will ignore the buying signal, and look to start selling.
The 0.70 level above looks to be a bit of a ceiling, and as a result we believe that any failure to maintain a rally between here and there will be a nice selling opportunity. A resistive candle will be used off of short-term charts in order to fine-tune our entries, as the 0.68 level will be targeted again.
NZD/USD Forecast – 0.65
We believe that the NZD/USD pair will eventually fall away down to the 0.65 handle, based upon the New Zealand economy being so dependent on exporting agricultural commodities. With that, it appears that the slowdown in the Chinese economy will have a negative effect on New Zealand, and that of course will continue to make the New Zealand dollar less attractive as we should see continued punishment as far as commodity currencies are concerned. It’s not just the New Zealand dollar that we are looking for some, we think that most commodity currencies will get absolutely wrecked if things keep up the way they are.
It is not until we break above the 0.72 handle that we would even consider buying this pair, and that is not something that we anticipate seen anytime soon. With this, we are sell and sell again as far as the New Zealand dollar is concerned. Granted, the 0.68 level did at one point hold some significance on longer-term charts, and a bounce from here really isn’t a big surprise. In fact, it’s something that we been calling for recently. That bounce though should offer “value” in the US dollar.