Potential Signal:
- I would be a seller of this pair anywhere near the 0.58 level with a long wick on the candle.
- If we could break above that level, I would get out, with my stop loss being the 0.5875 level.
- A target for this pair could be the 0.5640 level.
The New Zealand dollar has been back and forth during the trading session on Thursday as we continue to wait for the jobs number coming out of the United States on Friday. At this point in time, I do believe that if we can break above the 50 day EMA on an impulsive move, I’m willing to short this pair at 0.58, assuming that we see a little bit of a pullback. If we can close above there on a daily trade chart, then it’s a different story. But right now, I suspect that we have plenty of resistance above that we can take advantage of.
On a Breakdown
If we were to break down below the 0.56 level, then I think it’s likely that we will go down to the 0.55 level. In general, this is a market that I’m still bearish about, and I do recognize that we are at the bottom of a major downtrend. And I also recognize that there are a lot of people out there that are concerned about the overall health of the global economy and New Zealand is not where you run to in that situation. So, with that being said, I’m looking to fade rallies preferably, but I would also sell a breakdown. I do not want to own the New Zealand dollar until we get a daily close well above the 0.58 level and then I will have to look at the fundamentals, the interest rate differentials, GDPs and a whole ton of other fundamental markers that I pay attention to before I start buying. That would be a huge shift in the entire market. And right now, I just don’t think we’re there. Now, I realize we have sold off quite drastically and that might be what this is, just simple digestion.
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