NZD/USD Technical Analysis – February 25, 2015

The NZD/USD pair broke down during the session on Tuesday, testing support near the 0.7450 handle. We did bounce enough to form a bit of a hammer though, so that of course shows that there are buyers below in order to pushes market higher. If we can break above the top of the hammer, which is essentially a move back above the 0.75 handle, we believe that the market will then reach towards the resistance at the 0.7650 level. In fact, although I believe that this market is negative overall, I think we may consolidate in this general vicinity for the time being.

With that being the case, I cannot help but recognize that the New Zealand dollar will suffer due to the fact that the commodity markets are fairly soft at the moment, but could get a bit of a bounce as they need to take a breather. After all, the markets can’t fall forever, and that’s going to be true in both the commodity markets, as well as the New Zealand dollar.

However, let us not forget that the Royal Bank of New Zealand recently intervened to sell off the Kiwi dollar. Because of this, I think that sooner or later markets will remember that and we will start selling. If we break down below the bottom of the hammer for the session on Tuesday, that would be a very negative sign but I do see support all the way down to the 0.73 handle at this point. With that, it’s difficult to sell so I wouldn’t be surprised at a bounce in this market for the short-term. I think that longer-term sellers are still a large part of this market, and will return again and again. At this point time, I do not see the argument for a longer-term uptrend.