NZD/USD Forecast August 7, 2017, Technical Analysis

The New Zealand dollar initially dipped during the day but then recovered on Friday. However, later on during the employment figures, the New Zealand dollar crumbled as the US dollar has seen a significant amount of strength. The market found support at the 0.74 region, but I think longer-term we are looking at a more significant pullback. I like selling short-term rallies that show signs of exhaustion, and I believe that a breakdown below the 0.7380 level should send this market down to the 0.73 handle after that. The market will probably follow the commodity markets overall, and with the US dollar showing signs of strength, it’s likely the commodities will suffer.

Volatility

I think the only thing you can count on is that there’s going to be a significant amount of volatility in the markets. However, the New Zealand dollar is an excellent way to play the commodity markets, and what I typically will use is the CRB Index, as it is a basket of commodities that are easy to follow. There is a negative correlation between the 2 markets, so I use that as a bit of a tertiary indicator. Ultimately, I think that the 0.75 level above is a bit of a “ceiling” in the market, and therefore every time we rally and show signs of exhaustion, I think it sets up for a nice selling opportunity, and will use exhaustive candles on the hourly chart to get involved. However, as I expect to see a lot of volatility, I am going to use smaller positions than usual.

NZD/USD Video 07.8.17