NZD/USD Forecast December 13, 2012, Technical Analysis

The NZD/USD pair shot straight up again during the session on Wednesday as the Federal Reserve continues to extend its monetary policies further. The easing out of the United States should continue to propel commodity currencies over the long run, but at this point time we simply feel that this market is far overextended in needs to pullback.

With that being said, we would love to go long of this pair somewhere near the 0.83 handle if it manages the fall that far. If it does not, the 0.84 handle could offer support as well. We do think though that there does come a point in time where it becomes dangerous to be long of this pair. We are getting closer and closer to the 0.85 handle, and as such we think that serious resistance will step into the market sometime fairly soon.

Even though we feel that this market will continue much higher, there could be choppiness ahead and as a result we are simply waiting for a pullback to get the New Zealand dollar at a cheaper price. When a market moves like this, it is only a matter time before pulls back. It is especially true in a market like the New Zealand dollar, as it is less liquid than many of the other currency pairs that we follow.

Even though we see the pullback that stated in this marketplace, we are not willing to sell it as this market is far too bullish. With the Federal Reserve willing to expand and extend its quantitative easing policies, is very difficult to buy the US dollar against anything, let alone a commodity currency. With that being said, we simply see this pullback as an opportunity to wait for the market tell us when it once to resume going higher. We will base our decisions upon the levels that represent “round numbers” and the way price reacts to them.

For example, if we get a hammer on the 30 min. chart that based around the 0.84 level, we would be willing to go long at that point. While we typically don’t advocate short-term trading, this is simply a way to enter the market with a little bit more precision than usual, based upon the longer-term (daily) analysis.