NZD/USD Forecast Dec. 6th, 2011, Technical Analysis

NZD/USD had a very, very, very quiet day on Monday. The pair is highly correlated with the commodity markets, and as such reacted very mildly to a fairly quiet day in that trading environment. The Kiwi is presently one of the favorite pairs for the bulls worldwide, and as a result will always have at least some kind of bid under it.

However, the pair has recently made a new swing low, and hasn’t filled the gap from two weekends ago. Because of this, a fall is probably coming soon. The 0.8000 level would have to be broken to the upside for us to be convinced otherwise. The “risk off” environment we find ourselves in has us doubting that this pair will manage that feat in the near future. With this in mind, we are actually bearish this pair, but waiting for some kind of confirmation.

The breaking of the hammer from Thursday to the downside is what we are waiting to see before shorting this pair. The market moving lower than that level would should significant support eroding, and this would more than likely has the pair continuing the downtrend that we have seen over the last several months. The pair is going to be very sensitive to the headline risks out there presently, and as a result it is one of the first pairs we sell when bad news is released. The pair is a fairly illiquid pair, and as a result we could see exaggerated moves considering we are getting closer to the holidays and the volumes in general should be lighter the longer we get into the month of December.

Not until we see a daily close above the 0.8000 level would we consider buying this pair. The global risks are currently far too great to consider it now, and as a result we still prefer to sell rallies as long as we are under that level, or selling the above mentioned breaking of support from the Thursday session. The closing above 0.8000 would have an effect of a short-term trend change again, so anything above there has to be taken seriously.

NZD/USD Forecast Dec. 6th, 2011, Technical Analysis NZD/USD Forecast Dec. 6th, 2011, Technical Analysis

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